Preamble

The House met at half-past Two o'clock

PRAYERS

[MR. SPEAKER in the Chair]

Oral Answers to Questions — DEFENCE

Disarmament

Mr. Andrew F. Bennett: asked the Secretary of State for Defence what contingency plans exist in the Ministry of Defence to review contracts, reduce manpower and to reallocate resources if disarmament talks reach successful conclusions.

The Secretary of State for Defence (Mr. John Nott): We shall, of course, be ready to adjust our forward programmes if balanced, binding and verifiable agreements to reduce armaments and force levels are reached; but we cannot plan to do so until the nature and timing of specific agreements are known.

Mr. Bennett: I thank the Secretary of State for that reply. What does he mean by "ready"? Do any of the contracts that are being placed contain contingency clauses that show that the Government have any faith that they genuinely want the disarmament talks to be successful?

Mr. Nott: I hope that the current round of disarmament talks will be successful. If they are, I do not foresee any problems in reducing the level and scale of our armaments in accordance with any agreement. However, it is not necessary to have in contracts clauses of the kind suggested by the hon. Gentleman.

Sir Victor Goodhew: Will my right hon. Friend confirm that one hindrance to any agreements in the past has been the difficulty of verification, because the Soviet Government will not allow any inspection? Will he also confirm that the moment that the Soviet Government make such a move the British Government will enter into a verifiable and reasonable agreement?

Mr. Nott: I congratulate my hon. Friend on his knighthood. I am sure that it is a delight to the whole House.
My hon. Friend is correct in saying that the unwillingness of the Soviet Union to agree to inspection is one of the principal obstacles to successful arms talks. That is particularly so with regard to chemical weapons, of which the Soviet Union has been unwilling to allow any inspection procedures. That is one of the most worrying features of the present situation.

Mr. John Silkin: Was not our nuclear capability considered to be a basis on which we could attend the top

table of negotiations? As we are not there, is it not about time that we dropped the humbug of pretending that we have an independent nuclear deterrent and got on with the job of disarmament?

Mr. Nott: It is no humbug that we have an independent nuclear deterrent; it is a question of fact. It was a question of fact when the right hon. Gentleman was a member of the Labour Cabinet. I assure him that the Soviet Union regards our nuclear deterrent not as humbug, but as real.
We have never sought to be party to the arms control talks, although we are giving them every support.

Military Equipment (United States Order)

Mr. Dykes: asked the Secretary of State for Defence if he foresees the possibility of further United States orders for United Kingdom military equipment in the current year beyond the contracts and orders already announced.

The Under-Secretary of State for Defence Procurement (Mr. Geoffrey Pattie): There are a number of United Kingdom equipments under consideration by the United States Government for use by their Services which we consider could fulfil their requirements. These are being discussed by industry and the Government, and we hope that this will lead to orders being placed. The exact timing of any orders is, however, uncertain, and I cannot predict which contracts will be signed this year. My hon. Friend will be aware that the past year was a most successful year for sales of British equipment to the United States.

Mr. Dykes: I thank my hon. Friend for that reply. Does he still detect a certain reluctance by the American authorities to order European and British equipment? Specifically, is he worried about the Hawk trainer orders, or is he confident that they will go ahead intact?

Mr. Pattie: There have been some difficulties in Congress in recent weeks and prior to Christmas, but we are confident that the merits of the Hawk will win through. For some of the smaller British companies, not all pans of American industry are as aware as they might be of the working and implication of the 1975 memorandum of understanding. We are considering ways in which we can make this information and knowledge more widely available.

Sea Dart

Mr. Greville Janner: asked the Secretary of State for Defence when he now expects to decide whether to cancel the order for five 909 (GWS30) Sea Dart area air defence guided weapons systems to be fitted on type 42 destroyers.

Mr. Pattie: Discussions are currently being held with a view to converting the existing contract for five complete 909 radars to one which will provide spares for support of the Fleet. Assuming that these are successful, I hope to be in a position to take a decision shortly.

Mr. Janner: I welcome the Minister's assurance, but is he aware of the difficulties that the delay is causing to the talented, experienced and highly skilled work force at both the Marconi plants in my constituency and how anxious those people are to know that their jobs will be secure as a result of firm orders in connection with this or other contracts?

Mr. Pattie: I am indeed aware of what the hon. and learned Gentleman says. I assure him and the House that these decisions will not be unnecessarily prolonged.

Mr. Farr: Will my hon. Friend bear in mind that the works team has built up a great fund of expertise and that it would be sad for the nation if that expertise were to vanish through lack of work?

Mr. Pattie: I agree with my hon. Friend about the excellent record of the Marconi work force. That fact is being taken into account in our deliberations.

Mr. James Lamond: In view of the exchanges that have just taken place about employment for people on defence contracts, was it not rather naive of the Secretary of State to suggest that if disarmament talks were successful there would be no difficulty in fulfilling our side of the bargain? Is it not obvious that long-term planning is necessary if we are to enter into meaningful disarmament talks, including the meeting of the United Nations which starts in June in New York?

Mr. Pattie: I was under the impression that my right hon. Friend had made clear his response to the previous question. I am sorry that the hon. Gentleman could not follow it.

Armed Forces (Overseas Deployment)

Mr. Hooley: asked the Secretary of State for Defence in which countries or territories outside Europe the United Kingdom is maintaining military garrisons or units of the Armed Forces, whether Army, Navy or Air Force, including forces deployed in accordance with United Nations resolutions.

The Minister of State for the Armed Forces (Mr. Peter Blaker): There are British military garrisons stationed in Hong Kong, Belize, Brunei and the Falkland Islands. There are small administrative, or similar, detachments in Bermuda, the Bahamas, Diego Garcia, Malaysia, Canada and Kenya. We also have small teams of training and advisory personnel on loan or secondment to the Armed Forces of about 30 countries outside Europe. We provide a guard for the United Nations Command in Korea.

Mr. Hooley: Does the Minister agree that, apart from supporting United Nations peacekeeping operations, this world-wide scatter of military activities is a delusion of grandeur not shared by anyone outside the Tory Party? Would it not be more sensible to deploy the resources at home for education and health and recreating jobs?

Mr. Blaker: It is easy to say that health, education and so on are important, but if we neglect our defences and those of our allies, as a former Labour Secretary of State for Defence said, we shall be left with nothing but a heap of cinders. The garrisons to which I referred are in countries for which we have direct responsibility. Most of the other countries to which I referred have very small numbers of British personnel—perhaps two or three—who are there for particular reasons, such as looking after our training needs.

Mr. Alan Clark: Does my hon. Friend agree that certain factors—such as long-term strategic considerations, Service morale and humanitarian obligations to the people of the territories concerned—have to be divorced

from the cold statistics of the MOD balance sheet? Will he suggest to our right hon. Friend that one instance of this is HMS "Endurance" and our demonstrative will to defend our interests and those of the population of the Falkland Islands?

Mr. Blaker: There is a later question on the Order Paper on this subject. I ask my hon. Friend to wait for that.
The answer to my hon. Friend's general question is that our forces in the countries that I mentioned are there at the request of the countries concerned. We believe that that is in our interests as well as in theirs.

Dr. McDonald: What proportions of our GDP are spent on NATO defences and on other commitments? Do we not spend more on our NATO commitments than any other member of NATO?

Mr. Blaker: The answer to the hon. Lady's last question is "No". We spend a lower proportion than the United States. The total cost of the garrisons to which I referred is about £60 million a year. The cost of the other elements, which are very small, is much less.

Mr. Buck: Does not my hon. Friend's last answer show the enormous contribution that we are making to the maintenance of peace on a world-wide basis? What is our contribution to the United Nation's forces in the Cyprus area, where we have a substantial commitment and do excellent work?

Mr. Blaker: I did not refer to Cyprus because Cyprus regards itself as being inside Europe. We make a valuable contribution there to UNFICYP. We have about 4, 000 of our own forces in the sovereign base areas.

Weapons (Standardisation and Procurement)

Sir Anthony Meyer: asked the Secretary of State for Defence if he is satisfied with progress towards standardisation of weapons and joint weapons procurement within the Western European Union.

Mr. Pattie: There has been substantial progress, but we must aim towards a greater degree of co-operation within Europe in weapons production and development. We are working with all the bodies concerned, and I hope that the WEU colloquium, to be held in London at the beginning of February, will also make a useful contribution.

Sir Anthony Meyer: I am grateful to my hon. Friend for that reply. Does he agree that if there were more joint production and procurement of defence equipment the prospects, for example, for a European armoured fighting vehicle industry or for the European military aircraft industry would be infinitely better and that many more jobs would be available in this country and in other European countries than under the present half-hearted co-operation?

Mr. Pattie: I agree with my hon. Friend. Many people share his views in what I call philosophical terms. There is a danger that almost too many bodies are involved in trying to turn his general ideas into reality. The independent European programme group is one body that we feel holds out the best hope of achieving the type of results that my hon. Friend desires.

Mr. Jim Spicer: Does my hon. Friend recall that four or five years ago within the European Community a token


entry was made for a research and development fund to be set up for helicopters? Will he undertake to have another look at that to discover why it died and, if possible, to resuscitate it, because clearly it is a matter in which we have a great interest?

Mr. Pattie: I remind my hon. Friend that the Italian and British industries are working together closely on a future replacement for the Sea King helicopter. That is largely covering the aspect that my hon. Friend has in mind.

Equipment Purchases

Mr. Hal Miller: asked the Secretary of State for Defence whether he has prolonged any previously announced timetable for the purchase of equipment for the Armed Forces.

Mr. Nott: Timetable changes in a large and diverse procurement programme costing up to £6 billion will always be necessary, but the main features of the programme envisaged in the Defence White Paper—Cmnd. 8288—stand.

Mr. Miller: Does my right hon. Friend agree that, contrary to the trend of questions by the Opposition, service in the Armed Forces provides valuable jobs for those who wish to serve their country and that the equipment they use provides valuable jobs in our industry? Does he realise that there is uncertainty in our defence industries arising from the stream of releases about cancellations and prolongations? Will he therefore take an early opportunity to restate the position on defence procurement and thus reassure both industry and those who serve in the Armed Forces?

Mr. Nott: My hon. Friend is right. The professionalism and dedication of our Armed Forces are admired throughout the country, and we should be proud of them.
On procurement generally, we shall spend more in real terms with British industry in the next financial year than we did this year, and this year we are spending more than we did last year. My hon. Friend is right to point out that there will have to be adjustments—perhaps changes of a few months—to some programmes. Changes are inevitable in such a large programme—amounting next year to about £6 billion—but, as I have made clear, the strategy set out in the White Paper that was published in June remains. I believe that all the major programmes there will be maintained.

Mr. George: How many aeroplanes are available for the air defence of the United Kingdom? How does the Secretary of State's recent announcement regarding Tornado affect the air defence variant of Tornado? If that is likely to be delayed, how does he square that with the oft-repeated charges made by the Conservatives in Opposition that our air defences were grossly inadequate?

Mr. Nott: The air defence version of Tornado is hardly affected by the reduction in the peak deliveries from just over 60 aircraft to 44 aircraft. That reduction will affect the strike version of Tornado more than the air defence version, which may be affected by a month or two, but little more than that. Like the hon. Gentleman, I regard the air defence of the United Kingdom as of the greatest importance. We have considerably enhanced the situation and agreed to run two Phantom squadrons into the 1990s.
That is a new decision. We intend to arm 72 of our Hawk aircraft with Sidewinder missiles. The huge programme for improving the ground environment, such as radar and other devices for the defence of the United Kingdom, continues. We are concentrating more attention and resources on that area.

Mr. Speed: Does my right hon. Friend recall that the 1980 White Paper contained an intention to purchase new mine-sweepers for the Royal Naval Reserve? Two years later there is still no sign of those mine-sweepers, which are desperately needed to replace the ageing fleet. Wile n will they be produced?

Mr. Nott: My hon. Friend is right to point out that the Royal Naval Reserve urgently needs those mine-sweepers. I hope to begin placing the orders in the next financial year.

Mr. Snape: Is it not a fact that, thanks to the Secretary of State's last announcement, the bulk of the bill for the Tornado programme will have to be paid in the late 1980s? How does the right hon. Gentleman envisage paying the immense bill not only for the 385 Tornado aircraft on order for the Royal Air Force but for the ridiculous, nonsensical and expensive Trident project? The bulk of the expenditure on that project will be due at about the same time.

Mr. Nott: The bulk of the expenditure on Tornado is being met now. In the next financial year the Tornado programme will cost the Ministry of Defence budget about £1, 000 million. The peak expenditure profile will occur in the next few years. Expenditure will be tailing off by the mid-1980s. The Tornado programme as a whole is infinitely more expensive than the Trident programme as a whole. We are talking about a total programme cost of about £11¼ billion for the Tornado. That huge programme is proceeding successfully.

Mr. Robert Atkins: Does my right hon. Friend agree that the recession has caused his Department's budget problems, because of the early delivery of a wide variety of equipment, and that the flexibility of his budget should be increased to allow him to encompass the problems that he has mentioned? The example of Tornado springs to mind.

Mr. Nott: My hon. Friend is right. The principal. problem facing the defence budget is that, due to the recession, Ministry of Defence contractors deliver equipment earlier than they would otherwise. That has to be fitted into a tight annual cash limit. More flexibility from one year to another would enormously benefit the management of defence resources and make it much more efficient. More flexibility would be a great plus towards looking after the programme.

Mr. Marks: Has there not been delay in equipping and maintaining our forces because of the takeover and closure of factories? For example, has not Polaris maintenance been delayed because of the closure of Laurence Scott and Electromotors, Manchester?

Mr. Nott: I am not aware of any such delays. Polaris is constantly on patrol and has been for the past 15 years. I am not conscious of any problems such as those mentioned by the hon. Gentleman. If he has a particular point to make, perhaps he will draw it to my attention.

Royal Naval Vessels (Deployment)

Mr. Trotter: asked the Secretary of State for Defence whether he intends to continue to deploy Royal Naval vessels in the Indian Ocean; and what plans he has to deploy naval task forces outside the North Atlantic Treaty Organisation area.

The Under-Secretary of State for the Armed Forces (Mr. Jerry Wiggin): There are no immediate plans to end the Royal Navy presence in the Indian Ocean. As announced in the White Paper, Cmnd. 8288, we intend to resume this year naval task group deployments outside the NATO area.

Mr. Trotter: I welcome that commitment to an overseas presence, but, given Admiral Gorshkov's statement that the Soviet Navy can win wars by its presence, without firing a shot, will my hon. Friend bear in mind that the Royal Navy's role is to preserve the peace as much by its presence as by fighting a war?

Mr. Wiggin: I endorse my hon. Friend's comments. Task groups are deployed to demonstrate Britain's capability to defend its interests and those of its allies outside the NATO area as well as to enhance relations with friendly countries in those parts of the world.

Mr. Newens: What further military development of Diego Garcia is proposed by the United States of America, which has a heavy concentration of forces in that area? Is the role of British personnel stationed there solely that of a support force? Will the Minister note that many of us would greatly deplore an increase in the British commitment in that part of the globe?

Mr. Wiggin: Those remarks fall well outside the purview of the question. I understand that our interests are very small.

Mr. Churchill: Is my hon. Friend aware that the British public are profoundly puzzled and surprised by the proposed sale of HMS "Invincible", which is the most modern and valuable of the Royal Navy's defence assets? According to experts on both sides of the Atlantic, since that class of carrier was first ordered, the threat to our energy supplies, to the Cape sea route and to transatlantic communications in a period of tension—let alone in a period of war—has grown. Therefore, will my hon. Friend confirm that the Government will reconsider the proposed sale?

Mr. Wiggin: Again, such points are outside the purview of the question. However, if my hon. Friend studies the White Paper he will find that whatever the Government are planning can be found in it.

Mr. Denzil Davies: Is it not true that vessels are deployed in the Indian Ocean, not for strategic reasons, but to satisfy the Prime Minister's delusions of grandeur and to help President Reagan with his rapid deployment force and the base on Diego Garcia? As the Government have made such drastic cuts in the Royal Navy, would it not be better to deploy those vessels in the Eastern Atlantic, instead of sailing them aimlessly round the Indian Ocean?

Mr. Wiggin: As I said, the original deployment was the direct result of the war between Iraq and Iran and the necessity to protect British and allied interests if the Straits of Hormuz were closed. Although that risk has decreased, it is judicious to keep ships in that part of the world.

British Aerospace

Mr. Nicholas Winterton: asked the Secretary of State for Defence if he proposes to place new orders for aircraft with British Aerospace during the next 12 months.

Mr. Pattie: Yes. The timing and nature of orders will, however, depend on our current consideration of our spending plans.

Mr. Winterton: I had hoped that my hon. Friend would be a little more forthcoming. Does he agree that British Aerospace makes a major contribution to Britain's defence and employs tens of thousands of people? If we purchase aircraft from British Aerospace, will it not set a fine example for exports? The industry has a record that is almost second to none in exporting its goods. Will my hon. Friend assure the work force that orders will be forthcoming to maintain not only the production line, but research and development at British Aerospace?

Mr. Pattie: I am glad to endorse my hon. Friend's support and praise for British Aerospace. He will know that at the Woodford and Chadderton division the Nimrod maritime reconnaissance conversion programme is continuing, together with the airborne early-warning programme, and a good amount of civil work is being done. Like my hon. Friend, I hope that the signs of interest being shown by foreign buyers in those aircraft will prove fruitful. In that way we can sell more of those aircraft and possibly open the production line. That would be a highly satisfactory state of affairs.

P110 Project

Mr. Robert Atkins: asked the Secretary of State for Defence what assistance he is giving to British Aerospace in its search for private funding of the P110 project.

Mr. Pattie: Through ministerial and other contacts the Government are helping British Aerospace to promote the P110 with potential customers who, it is hoped, will contribute to the cost of this private venture development.

Mr. Atkins: Is my hon. Friend aware of the critical importance to the Warton division of British Aerospace of an early decision on the P110 project, the so-called Jaguar replacement, because if a decision is not taken soon about whether it should be privately or Government funded the research and design teams there will effectively be broken up? That will be very detrimental both to British Aerospace and to Britain's manufacturing capacity.

Mr. Pattie: My hon. Friend knows that British Aerospace has said that it will continue to fund the project at least until midsummer and possibly to the end of this year. I agree with him about the urgency of attracting some foreign interest so that the money necessary to fund the development is forthcoming.

Mr. Stan Thorne: Does it ever disturb the Minister that he is involved in the immoral and destructive pursuit of armaments manufacture? Does he not believe that he might be better employed generating improvements in the National Health Service?

Mr. Pattie: I am sure that the hon. Gentleman's constituents who work in the British Aerospace factory at Warton would take it somewhat amiss that the comments


that he has made to me can be equally applied to them. It is a fine company and a fine work force doing an important job to safeguard Britain's defences.

Lord James Douglas-Hamilton: Is my hon. Friend aware that Ferranti Ltd., which employs several thousand people in and around my constituency, regards the success of the project, in which it has an interest, as being of the utmost importance both in terms of technological development and employment?

Mr. Pattie: We are very much aware of Ferranti's involvement in the project and of its excellent contribution to this and other projects.

Cruise Missiles

Sir William van Straubenzee: asked the Secretary of State for Defence when he expects the first cruise missiles to be sited in Berkshire.

Mr. Blaker: On current plans, the first cruise missiles are due to be deployed at RAF Greenham Common in Berkshire by the end of 1983.

Sir William van Straubenzee: In working on that programme, will my hon. Friend reject totally some local views to the effect that, by virtue of the siting, the county of Berkshire will in some way become a more vulnerable target? Will he remember that the vast majority of local people believe that the best way in which to avoid a third world war is through the robust maintenance of our defences?

Mr. Blaker: I am grateful to my hon. Friend for his robust support of the project. I welcome what he says about opinion in Berkshire in general. The deployment of the cruise missile will help us to deter war, which is the main objective of our military policy. As to the vulnerability of Greenham Common, my hon. Friend will he aware that in times of tension or war the cruise missiles would be deployed away from the base.

Mr. Stoddart: Is the Minister aware of the picket of the Greenham Common base by a group of women who, like me, never wish to see the cruise missile deployed there or elsewhere? Is he also aware that Newbury district council is trying to stop the picket by evicting people from that piece of wasteland? Can he assure us that neither he nor the American Department of Defence has put any pressure on Newbury district council?

Mr. Blaker: I am aware of the presence of that group of women on the site. The land is common land and does not belong to the Ministry of Defence. The fate of these people is not a matter for the Ministry of Defence.

Mr. Michael McNair-Wilson: Can my hon. Friend confirm that when those missiles are deployed at RAF Greenham Common there are no circumstances in which they can be fired without the consent of the Government?

Mr. Blaker: I confirm that fact.

Mr. Denzil Davies: Are not the constituents of the hon. Member for Wokingham (Sir W. van Straubenzee) right to be worried, because was not the cruise missile designed to fight a limited nuclear war in Europe? Does not the very concept of a limited nuclear war make it more likely that there will be a nuclear war? Does the Minister agree that the main priority should be conventional armaments instead of cruise missiles?

Mr. Blaker: There are many people in Britain and in other Western countries who are worried about the existence of nuclear weapons. One purpose of the Ministry of Defence is to explain the facts about nuclear weapons to counter the many mis-statements of fact that come from other sources. One remark made by the right hon. Gentleman demonstrates that he is suffering from a misapprehension. The missiles are not intended to fight a limited nuclear war in Europe. They are intended to show that the United States of America is closely tied in to the defence of Western Europe, thus adding to the deterrent effect presented to any potential aggressor.

Public Relations

Mr. Dubs: asked the Secretary of State for Defence how much his Department will spend on public relations in 1981–82.

Mr. Blaker: This year we expect to spend just over £3·5 million on public relations in the Ministry of Defence. That covers the salaries of Ministry of Defence public relations staff throughout the world, overheads and a wide variety of press briefing and press facility work both at home and abroad.

Mr. Dubs: Is the Minister aware that expenditure on defence is inevitably a matter of political controversy? Can he identify the proportion of his public relations budget that is being used to justify his present expenditure policies? For example, is he aware that in recent months the Royal Navy has been carrying out a series of presentations that, according to my constituents, have borne a close resemblance to party political broadcasts? Can he justify those presentations?

Mr. Blaker: If the need to defend Britain adequately has become a matter of controversy between the parties in the House, that is a matter of great regret, because it used not to be a matter of controversy. We used to agree that a satisfactory defence policy was the prime objective and duty of any Government. The purpose of our public relations effort is to explain the facts of our defence policy. It is obvious from some of the questions from the Opposition that that is a necessary task.

Mr. Stokes: Would it not greatly help public relations if some Opposition Members, instead of constantly criticising Her Majesty's Forces, praised Britain's defence effort?

Mr. Blaker: That would be a welcome change. I have no doubt that the vast majority of British people welcome the activities of our Armed Forces and believe that they are doing an excellent job.

Mr. Arthur Lewis: Can the Minister tell us how much of the £3·5 million will be used to explain to the public and the world why, in 1982, the Government are refusing to disclose the documents and evidence about the traitors Burgess, Maclean and Philby, on the ground that those public schoolboys' activities may damage us now? Is it not a cover-up of public schoolboys?

Mr. Blaker: The hon. Gentleman knows that that is not a question for me.

Mr. McQuarrie: Will my hon. Friend consider spending some of that money in carrying out a public


relations exercise in Gibraltar to try to increase the morale of the people there, which was badly deflated by his Department's decision to close the dockyard?

Mr. Blaker: We shall be explaining, as we have already explained, our policies on Gibraltar. Within the next few days I shall be receiving a deputation from Gibraltar.

Mr. John Silkin: Would it not have helped public relations concerning the closure of the Gibraltar dockyard if the Minister or one of his colleagues had been to Gibraltar and had had the guts to talk and listen to the people there?

Mr. Blaker: The right hon. Gentleman always gets his timing wrong. Last time we discussed this he urged me to go immediately to Gibraltar. I pointed out that Sir Joshua Hassan was about to arrive and that if I followed the right hon. Gentleman's advice we should cross in mid-air. As I am about to receive a trade union deputation from Gibraltar later this week, if I followed the right hon. Gentleman's advice exactly the same would happen again.

Trident and Cruise Programmes

Mr. Cryer: asked the Secretary of State for Defence how many representations he has now received on the Trident programme and the siting of cruise missiles in the United Kingdom; and if he will make a statement.

Mr. Gwilym Roberts: asked the Secretary of State for Defence how many representations he has received in connection with the Trident programme and the plans to locate cruise missiles in the United Kingdom; and if he will list these representations in the Official Report.

Mr. Nott: Since taking up my present appointment I have received about 210 letters and seven petitions concerning the Trident missile programme and about 370 letters and nine petitions concerning cruise missiles. These came both from individuals and from representatives of various groups.

Mr. Cryer: Will the Secretary of State confirm that those representations are based, first, on the fact that Trident will be between 15 and 30 times more powerful than the current Polaris missile, making it an instance of further nuclear escalation, and, secondly, that the cost is soaring out of all control and is now approaching or exceeding the £11·25 million cost of Tornado? Will he confirm that the representations are also based on the fact that cruise missiles will be entirely under the control of the United States, with both keys in the hands of the United States? Does he agree that that, together with the fact that they cannot be verified, is a major cause of concern?

Mr. Nott: The representations cover a wide range of genuine concerns. They are not related to any specific issue. The hon. Gentleman does not yet know the cost of the possible option of a Trident 2 missile, but I can tell him that his figures are widely exaggerated and that the Tornado programme will be far more expensive than the Trident programme. With regard to cruise missiles, there is a long-standing arrangement, which has survived two or three Labour Governments and which we have not changed, covering the decision-making process with regard to the release of nuclear weapons.

Mr. Eldon Griffiths: With regard to the representations that my right hon. Friend has received, many of them

from East Anglia, may I congratulate him and his colleagues in the Foreign Office and the Ministry of Defence on the way in which they have tackled this problem throughout the country? Now that they have won the intellectual argument in respect of nuclear weapons, will he go further and refute some of the nonsense now being talked about nerve gas at American bases in this country?

Mr. Nott: On the latter point, it is utterly untrue that the Americans intend to deploy chemical weapons forward, and the rumour has been denied by the American Department of Defence.
With regard to the debates about nuclear weapons, we still have much explaining to do and a long way to go, but I am encouraged by the evidence of such polls as we have seen that the broad mass of the British people and, so far as I can judge, a majority of subscribing members of the Labour Party, believe in the maintenance of an independent deterrent for this country, because they know that it is essential for the maintenance of peace. We shall continue to argue that peace depends on our retaining strong defences in this country, and I hope that we shall convince more and more people as we go along.

Mr. Frank Allaun: Did the Secretary of State see the recent interview with David Greenwood on "Panorama"? In the light of that interview and of the fact that we are likely to take the more advanced missile, will he give a firm assurance that, compared with the original Government estimate of £5 billion, the final estimate will not exceed £10 billion at current prices?

Mr. Nott: The hon. Gentleman will have to await the announcement of our decision. When we announce the decision, we shall give the figure. I saw the interview with Mr. Greenwood. Some of the figures presented in the programme were greatly exaggerated. The hon. Gentleman will have to await the Government's decision. When we announce the decision, we shall give the up-to-date figures.

Mr. Best: Does my right hon. Friend agree that the declaration of nuclear-free zones by certain local authorities, and the belief that the siting of cruise missiles makes this country in some way more vulnerable to attack, are based on a fundamental misapprehension that any future conflict would not be fought against industrial and population targets as well as military targets? Would not those people be better employed in informing the Soviet Politburo of their nuclear-free zones so that it may agree to them?

Mr. Nott: I agree with my hon. Friend. The declaration of such nuclear-free zones is a fatuous way to proceed. I cannot understand how anybody could imagine that the Soviet Union or any other nation would take the remotest notice of an area being declared a nuclear-free zone. With regard to the suggestion that Europe should be declared a nuclear-free zone, my hon. Friend will know that if the Soviets removed their SS20 and other missiles out of Europe they could hit exactly the same targets from the other side of the Urals. The whole concept therefore makes no sense and, indeed, will tend to encourage rather than to prevent war.

Mr. Cryer: On a point of order, Mr. Speaker. In view of the totally unsatisfactory nature of the Minister's reply, I beg to give notice that I shall seek to raise the matter on the Adjournment at the earliest opportunity.

Oral Answers to Questions — PRIME MINISTER

Engagements

Mr. Skinner: asked the Prime Minister if she will list her official engagements for 26 January.

The Prime Minister (Mrs. Margaret Thatcher): This morning I had meetings with ministerial colleagues and others. In addition to my duties in the House, I shall be having further meetings later today.

Mr. Skinner: Now that the official figure for unemployment has exceeded 3 million, is the Prime Minister proud of the fact that she has brought so much despair to so many families in the United Kingdom? Is she proud of the fact that she and the Government have created more havoc in the British economy than the German High Command in the whole of the last war? Is she proud that, to carry out this ill-fated monetarist experiment, she has had to increase taxes? [Interruption.] Is it not time—[HON. MEMBERS: "Speech."]

Mr. Speaker: Order. The hon. Gentleman must be allowed to finish his question, just as everybody else must be heard this afternoon.

Mr. Skinner: Is it not time for the Westminster Ripper to join the unemployment trail, pack her bags and go?

The Prime Minister: In response to the hon. Gentleman, of course we all deplore the tragic fact that unemployment has reached 3 million and so many people who want to work find themselves without a job. Contrary to what the hon. Gentleman says, Conservative Members also feel very strongly about this.

Mr. Austin Mitchell: When will the right hon. Lady resign? Does it have to be 4 million?

The Prime Minister: I find the comments of the hon. Member for Bolsover (Mr. Skinner) and his reference to the German High Command utterly distasteful, particularly for those who suffered or lost relatives in the last war.
There is a certain amount of encouraging news. There is now less short-time working, more overtime, an increased inflow of vacancies and an increased stock of vacancies, and unemployment is rising at a lesser rate than it was.
I have but one comment to make about the hon. Gentleman's reference to Germany. Perhaps he will bear in mind that in the past year unemployment in West Germany rose by 586, 000, which is not very different from the 651, 000 by which it rose in this country.

Mr. John Townend: Does my right hon. Friend agree that the industrial action taken by railwaymen at King's Cross to intimidate newspapers and to influence what they print is a direct threat to freedom? What action does she think that British Rail should now take?

The Prime Minister: No one in this country, whether a member of a union or not, must be allowed to jeopardise the freedom of the press. I condemn any action, whether by trade unionists or others, which tends towards that end. All industrial action loses jobs. It does not gain them.

Mr. Foot: As the Budget Statements and the Budgets of the right hon. Lady's Chancellor of the Exchequer have contributed so much to the terrible figures published today, will she give us an assurance that at the meeting of the Cabinet on Thursday there will be no more cuts, no more deflation, no more monetary madness and no more of the measures that have contributed to this terrible disaster for the nation?

The Prime Minister: The short answer to the right hon. Gentleman is that I cannot say what will take place at Cabinet next Thursday. Cabinet agendas are not revealed. I can tell the right hon. Gentleman only that the meeting will be interesting, as usual. I know that encouraging figures are never of any interest to the right hon. Gentleman or to Labour Members generally. However, perhaps the right hon. Gentleman will note that our average record on inflation is now better than the record achieved throughout the previous Labour Government's term of office. Inflation is coming down, and it is vital that it should if we are to have a soundly based recovery.
May I also point out to the right hon. Gentleman that, possibly due to my right hon. and learned Friend's last Budget, the December current account surplus was nearly £500 million and that our productivity record this year put us at the top of the league table of the industrialised countries, and that is something of which we should be very proud. Our reserves are up to $23 billion, unlike during the equivalent period when the right hon. Gentleman was a member of the Labour Government, when they were down to $4 billion and we were broke.

Mr. Foot: Cannot the right hon. Lady appreciate that when the figures of unemployment reach a total of this nature it is an insult to the unemployed to talk of the encouraging figures presented to the nation, especially when most of her figures are misleading?—[HON. MEMBERS: "Oh!".] Does she not understand that the productivity figures are not back to what they were at the end of 1979? Does she not understand that the inflation figures are not back to what they were when she came to office? Does she not understand that on all these fronts she has taken measures that have pushed up the total of unemployed? Now we are told by the Secretary of State of Employment that we have not reached the peak. What is the peak that the right hon. Lady and her Government are heading for?

The Prime Minister: If the right hon. Gentleman studies the productivity figures for the right measure, which is productivity per man-hour, he will find that they have now reached an all-time record. If he will kindly tell me what other figure he challenges, I shall try to respond to him. As for inflation, the right hon. Gentleman's average record in 1974, his first year, was 16·1 per cent. whereas ours was 13·4 per cent. During his second year of office his average record on inflation was 24·2 per cent. while ours was 18 per cent. In his third year in office his average rate of inflation was 16·5 per cent. and ours is 11·9 per cent. That is the answer—we are better on all counts.

Mr. Foot: Does the right hon. Lady understand that, with her unemployment figures, 32 people are chasing every vacancy? Will she tell us what the figure was when she took office?

The Prime Minister: The right hon. Gentleman will find the vacancy figures in the Department of


Employment's press notice. The number of vacancies—the number of jobs now being notified to job centres—is increasing. The stock is greater than a year ago. The fact is that the right hon. Gentleman brought down unemployment temporarily at the cost of reflation, which increased unemployment later. If the right hon. Gentleman is really interested in the figures—[Interruption.]

Mr. Speaker: Order. The Prime Minister should not fight for a hearing. I have said that before. If we cannot have free speech in this House, we shall get it nowhere.

Mr. Winnick: She ought to fight for the unemployed.

Mr. Speaker: Order. The Prime Minister is entitled to be heard.

The Prime Minister: If the right hon. Gentleman is interested in ascertaining the facts, he will have observed that the total population of working age will increase by about 1 million during the period 1980 to 1985. We had a peak of schoolchildren reaching school leaving age of 16 years this last year of 920, 000. Of course these demographic factors have to be taken into account in judging the tragic figure of unemployment. The only real answer to the right hon. Gentleman is one that he will not accept, and it is that the consumer decides whether jobs go.

Mr. Pitt: asked the Prime Minister if she will list her official engagements for Tuesday 26 January.

The Prime Minister: I refer the hon. Gentleman to the reply that I gave some moments ago.

Mr. Pitt: In view of the delays that certain education authorities have suffered—notably Manchester—in receiving decisions from the Secretary of State for Education and Science on education reorganisation plans, will the right hon. Lady tell us when the parents, pupils and staffs of schools in Croydon that will be affected by reorganisation plans may expect to receive an answer to the submissions that were lodged with the Minister on 6 August?

The Prime Minister: I am not quite certain to which schools or to which sort of notice the hon. Gentleman is referring. I take it that he is referring to a section 13 notice under the Education Act 1944. If he is, there has inevitably to be a two-month period for representations to be made to the permanent secretary. The representations then have to be evaluated by the Secretary of State. They must then be discussed before a decision is reached. The hon. Gentleman must put the precise case to my right hon. Friend the Secretary of State for Education and Science.

Mr. John MacKay: Will my right hon. Friend take time today to welcome the moves made last week by the Bank of England, the Bundesbank and the Dutch to make a combined effort to bring interest rates down? Will she encourage them to do it again this week? Will she also encourage the American authorities to join in this venture?

The Prime Minister: The move to lower interest rates last week by a number of the banks in Europe was very welcome. It would hardly have taken place had we run the high deficit that Labour Members wish us to run. It is a fact that fear of the United States having a high deficit is holding up interest rates here.

Mr. Meacher: asked the Prime Minister if she will list her official engagements for 26 January.

The Prime Minister: I refer the hon. Gentleman to the reply that I gave some moments ago.

Mr. Meacher: On the day when unemployment is announced to have passed 3 million, is the right hon. Lady aware that official Government returns show that there are over 5, 700, 000 persons living in poverty on supplementary benefit, that it is officially estimated that there are a further 1, 100, 000 living in poverty but not claiming benefit, and that a majority of these are the unemployed and their families? Is she not ashamed that under her regime no fewer than one in eight of the British people are living in poverty, which is the highest figure for 50 years?

The Prime Minister: The hon. Gentleman will be the first to know that every time social security benefits are increased more people are eligile to come into benefit. I imagine that the hon. Gentleman's definition of poverty is based on those who are able to draw social security benefits. If he studies the record of the last Labour Government, he will find that increases in benefits usually led to an increase in the number of people eligible to draw them.

Sir Nigel Fisher: Is my right hon. Friend aware of the public concern at the increasing number of offences of rape? If, as I understand it to be the case, my right hon. Friend has ordered a review of that problem, could she state what form it will take and how long it will take to be completed?

The Prime Minister: We have considered the recent cases very carefully. Hon. Members will know that there was an advisory group on the law of rape, chaired by Dame Rose Heilbron. That was an excellent group. Most of its recommendations were implemented, with the unanimous approval of both sides of the House. Furthermore, building on that, the Criminal Law Revision Committee is now carrying out a comprehensive review of sexual offences, including rape and allied offences, and the penalties for them. [Interruption.] In October 1980 it published a working paper and invited comments. Those comments are still being received. The committee's intention is to produce a report that places the law on rape in the context of sexual assaults. That refers to the law on rape in England and Wales. The law is different in Scotland. I have thought it wise to attempt to discuss the recent events and cases—[Interruption.]—which, although they may not have given cause for concern to Opposition Members—[Interruption.]—have given cause for concern to many others.

Mr. Speaker: Order. The hon. Member for Stirling, Falkirk and Grangemouth (Mr. Ewing) has no right to try to shout anyone down from a sedentary position.

The Prime Minister: I thought it wise to discuss with Dame Rose Heilbron recent events and the concern that people feel following her report of 1976. I am happy to say that she has agreed to come to see me. We shall discuss those matters to see whether any further steps are required. With regard to the law in Scotland, there is a possibility of a private prosecution. Therefore I can say nothing further about that.

Rate Support Grant (Hackney)

Mr. Clinton Davis: I beg to ask leave to move the Adjournment of the House, under Standing Order No. 9, for the purpose of discussing a specific and important matter that should have urgent consideration, namely, 
the failure or refusal of the Secretary of State for the Environment to repay to the London borough of Hackney, among others, rate support grant that he has unlawfully withheld.
On 15 January 1981 the House resolved affirmatively the new levels of rate support grant payable for the year 1980–81. Parliament granted no extension of time for making that payment. On 21 October 1981, the Divisional Court decided that the Secretary of State's decision to withhold part of the rate support grant payable to Hackney and five other London boroughs was unlawful. Hackney and the other boroughs have been pressing continuously for the Secretary of State to fulfil his obligations pursuant to the court's judgment, but so far to no avail. The Secretary of State said, however, that he would reach a decision by the week commencing 11 January this year. That date has passed and still there has been no commitment from the Secretary of State, no communication from him and no explanation of the delay.
The conduct of the Secretary of State is, to say the least, thoroughly unworthy of a Minister of the Crown. He is defying a court order. He has no parliamentary authority for his capricious and vindictive conduct against a borough that is having to struggle against appalling deprivation, and he is in breach of his undertaking.
This matter falls within the ambit of Standing Order No. 9 in that it is clearly urgent, for the reasons that I have given. The amount of rate support grant withheld without considering interest is the equivalent of a 3p rate, which must be a substantial amount, and is of great immediacy in determining the rate for 1982–83. The matter is obviously specific and of great public importance not only to the people of Hackney and the other boroughs involved, but with regard to the Minister's responsibilities towards the House of Commons.

Mr. Speaker: The hon. Member for Hackney, Central (Mr. Davis) gave me notice before 12 noon today that he would seek to make an application under Standing Order No. 9 this afternoon. The hon. Gentleman asks leave to move the Adjournment of the House for the purpose of discussing a specific and important matter that he thinks should have urgent consideration, namely, 
the failure or refusal of the Secretary of State for the Environment to repay to the London borough of Hackney, among others, rate support grant that he has unlawfully withheld.
As the House knows, under Standing Order No. 9 I am directed to take account of the several factors set out in the Order, but to give no reason for my decision. I listened carefully to the hon. Gentleman, but I must rule that his submission does not fall within the provisions of the Standing Order and, therefore, I cannot submit his application to the House.

Railways (Industrial Action)

Mr. Speaker: The hon. Member for Nuneaton (Mr. Huckfield) gave me notice that he would seek to make the same application today that he made yesterday. In making his application he will no doubt refer to any differences which have arisen since I rejected his appeal yesterday; otherwise his action would be near to a gross abuse of our procedure.

Mr. Les Huckfield: I do not intend to trespass on your generosity in seeking to move the Adjournment of the House, Mr. Speaker.
I beg to ask leave to move the Adjournment of the House, under Standing Order No. 9, for the purpose of discussing a specific and important matter that should have urgent consideration, namely, 
the failure of the British Railways Board to honour its agreement to pay all footplate staff an increase from January this year and its consequences for industry and the travelling public.
As I have said in previous applications under Standing Order No. 9, the award was agreed by the Railway Staff National Tribunal in July and by the Advisory Conciliation and Arbitration Service in August. This interpretation of that award was agreed yesterday by the finance and general purposes committee of the Trades Union Congress. Therefore, it is not just an isolated award that is being interpreted in one way by one union but an issue that is so specific that it has been endorsed by that TUC committee.
I do not need to stress again the important consequences of the failure to pay that award. We are receiving new information day by day. Further information about the industrial consequences has come since yesterday, which shows that we could be in for a bitter and protracted struggle, from which certain sections of railway traffic and services may never recover. Fresh evidence of that has emerged since yesterday.
The matter is so urgent because the dispute has been going on for more than two weeks. It is time that the House had a chance to debate the issue, to hear the full facts and to present its judgment on the issue. I say that because national newspapers such as The Sun seem to be deliberately hell-bent on doing everything to obscure the full facts of the situation.
The only way for hon. Members to learn the full facts is for the House to be given adequate time to debate the issue. I respectfully suggest that, although it has been murmured that one or two of my points could be raised on the Transport (Finance) Bill later this evening, I am sure that you will accept, Mr. Speaker, that if hon. Members sought to raise those points at that time they would be trespassing on the generosity of the occupant of the Chair. Therefore, it is out of respect for you, Mr. Speaker, that I say that at this late stage we should have time to debate this important issue. There is no sign of a resolution of the dispute. The House is entitled to debate the matter. Above all, the country is entitled to hear the facts.

Several Hon. Members: rose—

Mr. Robert Adley: On a point of order, Mr. Speaker.

Mr. Speaker: Order. I shall take points of order after I have replied to the application under Standing Order No. 9.
The hon. Member for Nuneaton (Mr. Huckfield) gave me notice before 12 noon today that he would seek leave


to move the Adjournment of the House for the purpose of discussing the motion which he has read out and which I read out yesterday, namely, 
the failure of the British Railways Board to honour its agreement to pay all footplate staff an increase from January this year, and its consequences for industry and the travelling public.
As I said to the House yesterday, I have no doubt that the hon. Gentleman has raised an important matter. We all know that. The whole House knows it. The House also knows that my powers are limited to deciding whether the matter is of such a nature that it is essential for the House to change its business today or tomorrow and to give precedence to a three-hour debate—a three-hour debate only—to deal with the matter. I have listened with great care to what the hon. Gentleman said, but I must rule that his submission does not fall within the provisions of the Standing Order, and therefore I cannot submit his application to the House.

Mr. Adley: On a point of order, Mr. Speaker. I ask you to rule on the parliamentary implications of the fact that the hon. Member for Nuneaton (Mr. Huckfield) who is, I believe, speaking in the House on behalf of ASLEF, and presumably is retained by ASLEF, is, for the third time, putting forward what one can only describe with the best will in the world as his side, ASLEF's side, or at least a one-sided interpretation, of events. I do not speak for ASLEF. I do not speak for the British Railways Board. There can be no doubt of the seriousness—

Mr. Speaker: Order. I am waiting to hear a point of order.

Mr. Adley: Is it in order for the record of the House regularly to contain in Hansard a one-sided account, by use of words by the hon. Gentleman such as "honouring agreements" when no one, so far as I am aware, has sought to argue the case from the other side? I ask you, Mr. Speaker, to consider the parliamentary implications of what the hon. Gentleman is doing.

Mr. Speaker: I am obviously looking at the use of Standing Order No. 9, and I intend to use my discretion when it is necessary.

Mr. Robert Atkins: Further to that point of order, Mr. Speaker, and further to what you said when you called the hon. Member for Nuneaton (Mr. Huckfield), according to the Register of Members' Interests, the hon. Gentleman represents ASLEF in the House and yet is sponsored by the Transport and General Workers Union. Does not that imply a conflict of interest which should have been declared by the hon. Gentleman?

Mr. Speaker: That is not a point of order for me.
I hope that hon. Members on both sides of the House will not have an argument about that, because there is a Ten-Minute Bill that I believe the House is waiting to hear.

Mr. Bob Cryer: Further to that point of order, Mr. Speaker. I was a little concerned to hear you say that you would use your discretion on applications under Standing Order No. 9. As I recall, this was the subject of a debate and vote by the House when the Select Committee on Procedure recommended that they should be subject to your discretion. That recommendation was rejected. The procedure of using Standing Order No. 9 to

seek your consent for a debate is important and is jealously guarded by Members on both sides of the House. It was extensively used by the Tories—who are now complaining—during the lorry drivers' strike when a Labour Government were in office. Having taken a vote on this important right, we seek to maintain and extend it.

Mr. Speaker: I remind the hon. Gentleman that in order to preserve our rules all hon. Members must take care never to abuse them. That is what I am trying to guard, and I go no further.

Mr. Alexander W. Lyon: Further to the point of order, Mr. Speaker. Regarding the issue whether it is an abuse of Standing Order No. 9 procedure to repeat an application and to put one side of the case, surely it can never be argued in the House that it is an abuse of procedure to put one side of the case? There must be many examples from the winter of discontent of Opposition Members repeatedly submitting applications under Standing Order No. 9.

Mr. Speaker: I did not comment on the issue of putting one side of the case. My experience is that almost every hon. Member puts one side of the case. That is the purpose of our being here.

Mr. Jonathan Aitken: Further to the point of order, Mr. Speaker, surely it is common ground that for an application under Standing Order No. 9 to be repeated day after day unless a substantial new point has been made is an abuse of the procedures of the House? Therefore, the vital question is: has anything new been added to the application? The fact that appears to be new, that a committee of the TUC has endorsed the ASLEF action on pay rises, is a hair-splitting addition to an already repeated application. I suggest that it is for you, Mr. Speaker, to consider the new substantive point before deciding whether you will hear the same point of order day after day.

Mr. Speaker: The hon. Member for Nuneaton (Mr. Huckfield) rightly used that fact as one of his arguments since his application yesterday. I accepted it, which is why I took no further action.

Mr. Huckfield: Further to that point of order, Mr. Speaker. Of course, I intended no discourtesy to you in making a fresh application. In all cases, I have submitted the application in writing according to the traditions and procedures of the House. I hope that my handwriting was legible. I tried my best. In making a third application—I have checked with the Library—I was merely following the precedent that was set by Conservative Members during the alleged winter of discontent, when they submitted applications under Standing Order No. 9 on the same subject on more than one or two consecutive days.
My relationships with ASLEF and the TGWU are adequately agreed between the two unions and are listed in the Register of Members' Interests.

Mr. Speaker: Those hon. Members who had the privilege of serving in the House during the previous Parliament will recall that I had occasion to comment then about the necessity of not abusing our procedure under Standing Order No. 9. I have made such comments to hon. Members on both sides of the House.

Mr. Speaker's Constituency

Mr. Clement Freud: I beg to move, 
That leave be given to bring in a Bill to provide for the creation of a constituency to be known as St. Stephen's and represented by Mr. Speaker.
This is not remotely personal, in that it affects you, Mr. Speaker, as Mr. Speaker Thomas, as opposed to Mr. Speaker generally. The newspapers report that you, Mr. Speaker, are considering not standing after the next election—

Mr. Speaker: Order. It is grossly discourteous for the hon. Gentleman to refer to my personal position. I ask him to desist from doing so without a motion on the Order Paper.

Mr. Dennis Skinner: He is trying to get hold of your seat. It is scandalous.

Mr. Freud: No discourtesy was intended, Mr. Speaker. I personally hope that you remain Mr. Speaker for life and that you live for ever.
My proposed Bill provides a rare opportunity for discussing a problem before it arises. The problem is that in the current political climate the re-election of a Speaker, particularly a new Speaker, would be contested, and particularly contested in the event of one who does not have the publicity of having been in office. It would mean that the Member appointed by his fellow Members to sit above them and to keep in order their proceedings in a non-party political context, would fight committed political policies with the counter-punch of: "Good afternoon, I am Mr. Speaker. I hope that I may be certain of your vote." It works terribly well with a record of achievement. It is, however, less eloquent persuasion coming from a new Speaker. If Parliament elects a Speaker, it would be wrong for the people of Croydon, Chelmsford, Canterbury and Cambridge—I mention only four towns that begin with the letter "C"—to support hon. Members in their considered choice.
My Bill would isolate Mr. Speaker from political controversy. It would enfranchise his electorate. In a democracy it is the right of an elector to pronounce on the chief political, international and economic affairs of the day. While Mr. Speaker's seat is a representative one, those he represents are deprived of the opportunity of expressing their opinion on the important issues of the day.
This is not a new Bill, which is perhaps an earnest of its merit. A number of previous attempts to bring about a change in the procedure have been made in Parliament, in Committees and in conferences. Perhaps the last that will be remembered was made in April 1963. It is especially memorable because it was moved by Mr. Richard Marsh and because permission was given for it to be introduced after the tellers mistook the "Ayes" for the "Noes". That permission was rescinded the following day.
As the matter has been argued previously, I should like to explain the standard arguments that are used against this measure. The first is that if one appoints a Speaker to a nominal constituency without an electorate, how does one get rid of him when one wants to get rid of him? Will he, like the poor, remain around? The answer is that when hon. Members elect a successor to a Speaker, the Speaker goes. That is the intention of the Bill.
The question is asked, "Why stop at creating a constituency for one Speaker?" Why not create

constituencies for the Chairman of Ways and Means and for the Deputy Chairman? Why not create a constituency of St. George, of St. David or St. Denis? This is a specious debating point. We have one Queen, one Prime Minister and one Archbishop each of Canterbury and York. We have one Lord President of the Council. The office of Mr. Speaker comes sixth in the league table of offices of State and is held by one person.

Mr. Skinner: Get back to the roulette wheel.

Mr. Freud: Another argument is that if Mr. Speaker represented a special seat he would cease, on the loss of his office, to be an hon. Member. I believe that is desirable. It would be undesirable for any Speaker to revert to being an active party politician within the House of Commons. The last Speaker who did so was Mr. Speaker Addington in 1789, and he became Prime Minister. While any change in the identity of that office would be welcome, it is not actually the change that we, on the Liberal Benches, have in mind.
The one good argument against this proposal is that Mr. Speaker is "one of us". My contention is that Mr. Speaker is not one of us. He was, but we have elevated him to sit apart. He has absolute power; we must fight for ours. He lives here; we camp. We can practise our democratic right to be cussed; Mr. Speaker is bound by "Erskine May". He does not dress like us. He does not speak like us.
Another distinction is that upon the dissolution of Parliament we lose our office and Mr. Speaker keeps his. Under the House of Commons (Speaker) Act of 1832 he stays in office until his successor is elected. He can technically occupy the Chair without being elected a Member of Parliament. He is, in short, altogether special because we have elected him to be special.
My friend and neighbour, the hon. Member for Cambridge (Mr. Rhodes James), has told me, with his customary courtesy, that he hopes that I will not mind if he opposes the Bill. I have told him that I hope very much that he listens to my arguments. Marshal Clemenceau said:
I have heard speeches that have changed my mind but my vote, never".
I hope very much that hon. Members will have listened to my speech. I hope that they will think about the opportunity of creating a special constituency for Mr. Speaker, his to have and to hold, while he has the confidence of the House. When the next Speaker loses his seat at the general election it will be too late. I commend the Bill to the House.

Mr. Nigel Spearing: rose—

Mr. Speaker: I understand that the hon. Gentleman has given notice that he seeks to oppose the measure.

Mr. Spearing: It is the custom of the House to allow through a Ten-Minute Bill unless it appears, in principle or practice, to be injurious. I believe that this is one of those occasions. The effect of such a Bill, if it became law, would be contrary to many of the deeply-held principles on which the House operates. I shall seek to show that the arguments of the hon. Member for Isle of Ely (Mr. Freud) fall into that category.
There is, of course, some disadvantage in the present arrangement. That cannot be denied. There is disadvantage, conceivably, in the manner of election, to people who feel that they have no political voice, although how many would feel that that was an acute disadvantage


in these days I do not know. However, the electorate might gain by the fact that Mr. Speaker writes to Ministers on their behalf. There is the disadvantage that should not be overlooked for local party activists and the national party. I have no doubt that if two national parties were negotiating about seats that they might conceivably contest, the fact that an additional seat was available might make negotiations a little easier.
The hon. Member for Isle of Ely is wrong, I believe, when he says that Mr. Speaker is not one of us. He is an hon. Member but he is clearly an extraordinary hon. Member in many respects. Mr. Speaker Lloyd's remark in his farewell address to the House on 3 February 1976 has great merit. Mr. Speaker Lloyd said:
I firmly believe that the Speaker should be elected for a constituency, as are other hon. Members, so as to keep personally in touch with the hopes and fears and the personal and individual needs of many thousands of ordinary men and women, meeting them face to face from time to time and to know the problems of the area which he presents."—[Official Report, 3 February 1976; Vol. 904, c. 1140.]
That is one of the features of the House. Face to face, we face Ministers. Face to face, we face the Prime Minister. Face to face, we face each individual constituent who wishes to see us. If Mr. Speaker was not appointed by the House to which he was elected an hon. Member, there would be serious problems. Mr. Speaker was in the past appointed by the constitutional Crown of the day. Although he formally seeks that approval from that constitutional Crown today it is the political Crown of the day that is the opponent of the House of Commons as a whole. I do not believe that the political Crown is a five-year elected dictatorship. I am sure that my right hon. Friend the Member for Cardiff, South-East (Mr. Callaghan) would not agree either. The Prime Minister herself reminded hon. Members only a few days ago that it is certainly not a political dictatorship today.
Parliament has its say and Members of Parliament have their opinions. It is essential that the Speaker of the House, who is responsible for its proceedings and gaining the confidence of Members in those proceedings, is not seen in any way, even if mistakenly, as part of the apparatus of the political crown of the day. If he is not appointed by Members of the Parliament over which he presides, who appoints him? He would be a phantom Member for a phantom constituency and in danger of becoming a phantom Speaker. Why is this? Because, contrary to what the political text books may tell us, so much of what goes on here is in a personal, face to face confrontation between Members, and you, Mr. Speaker, have to face all of us.
It is our confidence in your judgment, Mr. Speaker that places you where you are and you continuously have to maintain that confidence of all sides of the House under all conditions. It is not an easy task and the fact that you, Sir, and any of your successors, whether they be ladies or gentlemen, have to face the temper of the times, the political feel of the age, and meet constituents day to day, places you in a position which any Member cannot therefore deny, whereas, if you were appointed by another body, perhaps a body of a very different political or personal complexion than the one over which you preside, there would be inevitable undermining of the authority which we place in your hands.
In 1939 a Select Committee of the House was set up to look into this problem. It had a widespread membership.

My esteemed predecessor but one, Mr. Will Thorne, was a Member; so was Mr. Lansbury and Mr. Clynes; Sir Winston Churchill was a Member; it was presided over by Mr. Lloyd George, Liberal. I do not believe that we should take Select Committee reports from the past or, indeed, the present, look at them and accept them, still less when times have changed. But these gentlemen had particularly long foresight. In paragraph 53 of their report, talking about the constituency of St. Stephens, they said:
Finally, the creation of a special constituency of this type would introduce into out political system the new and potentially dangerous principle of indirect election or co-optation.
Some Members may favour such a move. I believe that that would be fundamentally wrong. The election of Mr. Speaker by such a method should be cited as a precedent.
I conclude by quoting the conclusion of the Select Committee—one to which I hope civil servants and Ministers of all Governments might also pay attention:
Your Committee have, therefore, been reluctantly forced to the conclusion that each of the proposed schemes is beset by disadvantages of such weight as could not fail to produce worse complaints than those it sought to remedy.
I oppose the motion.

Question put, pursuant to Standing Order No. 13 (Motions for leave to bring in Bills and nomination of Select Committees at commencement of public business):—

The House divided: Ayes 15, Noes 252.

Division No. 49]
[4.05 pm


AYES


Alton, David
Penhaligon, David


Ashton, Joe
Ross, Stephen (Isle of Wight)


Callaghan, Jim (Midd't'n &amp; P)
Sandelson, Neville


Ford, Ben
Steel, Rt Hon David


Freud, Clement
Wainwright, R.(ColneV)


Grimond, Rt Hon J.



Hawksley, Warren
Tellers for the Ayes:


Janner, HonGreville
Mr. A. J. Beith and


Johnston, Russell(Inverness)
Mr. William Pitt.


McNally.Thomas



NOES


Adley, Robert
Canavan, Dennis


Aitken, Jonathan
Carlisle, John (Luton West)


Alexander, Richard
Carlisle, Kenneth (Lincoln)


Alison, RtHonMichael
Carter-Jones, Lewis


Allaun, Frank
Channon, Rt. Hon. Paul


Ancram, Michael
Chapman, Sydney


Archer, Rt Hon Peter
Clark, Hon A. (Plym'th, S'n)


Aspinwall, Jack
Clark, Dr David (S Shields)


Atkins, Robert(PrestonN)
Clark, Sir W.(Croydon S)


Barnett, Guy (Greenwich)
Clarke, Kenneth (Rushcliffe)


Beaumont-Dark, Anthony
Clegg, Sir Walter


Bennett, Andrew(St'kp'tN)
Cockeram, Eric


Benyon, W. (Buckingham)
Cocks, Rt Hon M. (B'stol S)


Berry, HonAnthony
Cope, John


Best, Keith
Corrie, John


Bevan, David Gilroy
Cranborne, Viscount


Biggs-Davison, SirJohn
Cryer, Bob


Blackburn, John
Cunliffe, Lawrence


Blaker, Peter
Cunningham, G.(lslingtonS)


Booth, RtHonAlbert
Cunningham, DrJ.(W'h'n)


Boothroyd, MissBetty
Davis, Terry (B'ham, Stechf'd)


Boscawen, HonRobert
Dean, Joseph (Leeds West)


Bottomley, Peter(W'wich W)
Dewar, Donald


Boyson, DrRhodes
Dixon, Donald


Brooke, Hon Peter
Dobson, Frank


Brotherton, Michael
Dormand, Jack


Brown, Michael(Brigg&amp;Sc'n)
Douglas-Hamilton, LordJ.


Brown, R. C. (N'castle W)
Dubs, Alfred


Browrne, John(Winchester)
Dunwoody, Hon Mrs G.


Bryan, SirPaul
Eadie, Alex


Buck, Antony
Elliott, SirWilliam


Budgen, Nick
Emery, Sir Peter


Campbell-Savours, Dale
English, Michael






Ennals, Rt Hon David
Hunt, David (Wirral)


Evans, loan (Aberdare)
Jenkin, RtHon Patrick


Evans, John (Newton)
John, Brynmor


Ewing, Harry
Johnson, James (Hull West)


Eyre, Reginald
JohnsonSmith, Geoffrey


Fairgrieve, SirRussell
Jones, Barry (East Flint)


Farr, John
Jopling, RtHon Michael


Faulds, Andrew
Kaufman, RtHon Gerald


Fenner, Mrs Peggy
Kerr, Russell


Finsberg, Geoffrey
Kershaw, SirAnthony


Fisher, SirNigel
Kilroy-Silk, Robert


Fitt, Gerard
King, RtHon Tom


Flannery, Martin
Lamond, James


Fletcher, A. (Ed'nb'ghN)
Lang, Ian


Fookes, Miss Janet
Leighton, Ronald


Forrester, John
LeMarchant, Spencer


Foster, Derek
Lennox-Boyd, HonMark


Fowler, Rt Hon Norman
Lestor, MissJoan


Fox, Marcus
Lewis, Arthur (N'ham NW)


Gardiner, George (Reigate)
Lewis, Ron (Carlisle)


Garel-Jones, Tristan
Litherland, Robert


Garrett, John (NorwichS)
Lofthouse, Geoffrey


Glyn, Dr Alan
Luce, Richard


Golding, John
McCartney, Hugh


Goodhew, SirVictor
McCrindle, Robert


Goodlad, Alastair
McDonald, DrOonagh


Gow, Ian
Macfarlane, Neil


Graham, Ted
McKay, Allen (Penistone)


Grant, George (Morpeth)
MacKay, John (Argyll)


Greenway, Harry
McNamara, Kevin


Gummer, JohnSelwyn
McQuarrie, Albert


Hamilton, James (Bothwell)
Marks, Kenneth


Hamilton, Michael (Salisbury)
Marlow. Antony


Hampson, DrKeith
Marshall, D(G'gowS'ton)


Harrison, RtHon Walter
Marshall, DrEdmund (Goole)


Havers, Rt Hon Sir Michael
Marten, RtHon Neil


Hayhoe, Barney
Martin, M(G'gowS'burn)


Haynes, Frank
Maxwell-Hyslop, Robin


Heffer, Eric S.
Mayhew, Patrick


Henderson, Barry
Maynard, Miss Joan


Hogg, N. (EDunb't'nshire)
Meacher, Michael


Holland, Philip (Carlton)
Miller, Hal(B'grove)


Holland, S.(L'b'th, Vauxh'll)
Mills, lain(Meriden)


HomeRobertson, John
Miscampbell, Norman


Hoyle, Douglas
Mitchell, David(Basingstoke)


Huckfield, Les
Mitchell, R.C. (Soton Itchen)


Hughes, Mark (Durham)
Molyneaux, James


Hughes, Robert (Aberdeen N)
Monro, SirHector


Hughes, Roy (Newport)
Morris, Rt Hon A. (W'shawe)

Question accordingly negatived

Orders of the Day — New Towns Bill

Order for Second Reading read.

The Minister for Housing and Construction (Mr. John Stanley): I beg to move, That the Bill be now read a Second time.
The Bill will increase the statutory borrowing limit for the new towns from its present level of £4, 000 million to £4, 500 million, with a provision for a further increase by affirmative order to £5, 000 million. The last two new town money Bills were in 1977 and 1980. The former, under the previous Government, increased the borrowing limit by £1, 000 million, and the most recent Bill in 1980 increased it by £750 million.
This Bill, of course, covers the five Scottish new towns and Cwmbran new town in Wales.
Although the 1980 Act increased the borrowing limit substantially—though not, as I have said, as much as the previous one in 1977—the past two years have seen substantial expenditure in the third generation towns, as well as some further development in the earlier towns, and in Scotland and Wales. Total gross development expenditure in this financial year and the last is well over £700 million.
We estimate that the aggregate net borrowing outstanding will reach the existing statutory limit of £4, 000 million in April or May of this year, but it could possibly be reached as early as mid-March, when towns need to borrow from the national loans fund to cover interest payments due from existing loans. We are, therefore, bringing the Bill forward now to avoid any interruption of the new town programme.
The extra £1, 000 million of borrowing proposed under the Bill is estimated to last approximately two years.
We are taking a more fundamental look at the present method of financing the new towns in the light of an assessment of their present and prospective ability to service their national loans fund borrowings out of their current revenue. Some of the new towns will not be able to do so for a great many years.
The very much higher interest rates that have been experienced since the early 1970s have led to large and long-lasting revenue deficits. It is questionable whether these deficits should continue to be financed by borrowings, which tend to enlarge the deficits still further. The Government will, of course, inform the House when they reach conclusions about the extent of the problem and any measures that are necessary, including, perhaps, the need for legislation. I expect to be able to report our conclusions to the House before the Summer Recess. Until this process is complete, the present method of financing from the national loans fund will continue, and the need for the Bill therefore remains.
I turn to the expenditure that will be made possible by the Bill. The Government's policy is to round off the existing new towns satisfactorily, making the maximum possible use of private sector finance. Public expenditure is now being concentrated on the inner cities. This means that the resources for the new towns will fall, while the urban programme, including provision for the two urban

development corporations, is being increased. However, we recognise that in a number of towns, particularly the third generation ones, there are important developments that still need to be completed. Some are already very advanced. For example, the new shopping centre at Peterborough will open in March, and the new railway station at Milton Keynes will open in May. But there are other important developments still to come—for example, the further town centre developments at Telford and the continuing opening up of the industrial area at Corby.
Development corporations and the Commission for the New Towns will be seeking to make the maximum use of private finance, but some public funding will still be needed. It will be needed for essential main road schemes—for example, the eastern expressway at Runcorn and the western approach road at Basildon, which clearly cannot be privately financed. Public expenditure will be needed for other essential infrastructure—roads and sewerage in particular—to round off housing, industrial and commercial areas in so far as this infrastructure cannot be financed by developers themselves.
Public funding may also be required for a limited programme of advance factories in towns such as Washington and Corby, where the private sector may be unwilling to take the development risk, and where there is an imperative local employment need to have industrial space immediately available for incoming firms. The Bill is therefore essential to the orderly and satisfactory completion of the new town programme over the next few years.

Mr. Giles Radice: Will the Minister confirm that the new towns in the North—for example, Washington—have an important role to play in job creation? Will he say something about the future of those new towns, particularly the three that I am thinking about in the Northern region?

Mr. Stanley: As the hon. Gentleman will be aware, my right hon. Friend has announced the proposed dissolution dates for the three new towns in the North-East, but I certainly agree with him about the important contribution that is made to local employment. I shall return to that matter a little later.
The Government are anxious to keep public borrowing down. We have therefore been seeking to make the greatest practical use of private finance. A considerable volume of new town industrial and commercial development is now being financed by sale and leaseback and lease and leaseback agreements with the private sector. Since May 1979 more than £150 million worth of new town development activity has been financed in this way. Basildon, for example, has recently entered into an agreement with a major insurance company which will finance its new £50 million shopping centre.
Private development finance is also being drawn into the new towns through industrial, commercial and housing developments being wholly privately funded on land sold to the private sector. In the last financial year—1980–81—we estimate that by this means the new towns in England obtained £37 million worth of offices and shops, £38 million worth of industrial space and £100 million worth of housing—all financed entirely by the private sector. These figures are likely to be significantly higher in the current financial year.
A further major way in which private finance is supplementing public expenditure in the new towns is through the sale of completed assets. Quite apart from producing a welcome extension of private ownership in the new towns and giving many firms the opportunity to buy their freeholds, the disposals programme has made, and is making, an indispensable contribution to the continuation of the industrial, commercial and private housing programmes of the new towns.

Mr. John Evans: How much cash flowing from the sale of the assets has been paid back to the Treasury?

Mr. Stanley: The receipts from the sale of assets have been used in part within the new towns; in part there has been some cash repayment to the Treasury. Any cash repayment to the Treasury has merely enabled the levels of borrowing and public expenditure for the new towns to be maintained at a higher level than would otherwise have been possible. As I have made clear, we could not have maintained the new towns programme at the level at which we have maintained it during the past three years without the special disposals programme. If the hon. Gentleman wishes to have a figure on that basis for the cash transfer I shall be glad to try to assist him if he puts down a question.

Mr. Evans: With respect, this is a Second Reading debate of a money Bill. It is a question that should be raised during the passage of the Bill. It is grossly unfair to suggest that I should put down a question on an important matter that arises on Second Reading.

Mr. Stanley: Perhaps the hon. Gentleman will let me continue. By the end of this financial year asset disposals will have realised getting on towards £300 million since the Government came to office. There is no question, as I said, that, without this sum, it would not have been possible to maintain new town development activity at the level achieved over the past three years. I can assure the House that we wish to see further public borrowing minimised, and that we shall continue to utilise private finance wherever this is practical.
I turn now to a number of new town issues which I know are of interest or concern to hon. Members and on which it might be helpful if I commented at this stage. My hon. Friend the Under-Secretary of State will, I know, try to deal with particular constituency points when he winds up.
First, there is the settlement of claims for defects in new town housing that has already been transferred. As the House knows, we commissioned the National Building Agency last March to assess and report to us on authorities' claims for grant towards the cost of remedying defects in transferred new town housing. These are, of course, claims under what is now section 51 of the New Towns Act 1981—formerly section 10 of the New Towns (Amendment) Act 1976. This work is well advanced and most of the necessary on-site survey work has already been carried out at all towns except Harlow. In Harlow the survey will start shortly. With the impending wind-up of the NBA, as I said in answer to an oral question from the hon. Member for Easington (Mr. Dormand) on 20 January, we have made arrangements for the contract to be completed by a private sector consultancy set up by former NBA staff. That will ensure the necessary continuity.

Mr. Stanley Newens: Will the Minister confirm that this will mean further delay in reaching a solution to a problem that has already caused considerable difficulties for the new towns?

Mr. Stanley: I am coming to that point.
Under the agreement that we signed with the consultancy last week the report is due to be submitted to us by the end of May. The NBA had in fact told us earlier that it would be unable to meet the original deadline of late April, so I hope that the House will agree with me that the new date for completion does not in practice mean a material slippage of the timetable. We are as anxious to reach conclusions on this long drawn-out matter as the councils concerned. We shall be wanting to put proposals to the local authorities as soon as we can after we hive received the report and have been able to evaluate it.
Some hon. Members have expressed concern about difficulty and delay experienced by new town industrial and commercial tenants who wish to purchase the freeholds, or possibly long leases, of the factories, offices or shops that they occupy. The Government's policy is clear. It is to give sitting tenants every reasonable opportunity to bid when a development corporation or the commission puts the premises that they are occupying on the market. We have issued detailed guidelines to the commission and the development corporations on this point, laying down in detail the way in which advance notice should be given to sitting tenants.
In some cases it may not be possible for tenants to buy individually, because their premises are part of a parade of shops or part of an industrial estate and when to sell properties individually would materially reduce the value of the shopping parade or the industrial estate as a whole. However, in this situation, new town coporations and the commission are ready to deal with the tenants as a group if they wish to buy the whole parade or estate as a consortium.

Mr. Newens: What price the small business man!

Mr. Stanley: We know of at least five cases where consortia negotiations are in train and one where a consortium purchase has been completed.
Apart from this, a large number of sitting tenants, individually, as a result of our disposal policy, have been able to buy the freehold of the premises that they have previously leased. Under the present Government more than 350 industrial and commercial tenants in the new towns have bought their freeholds or are in the process of doing so, thus strengthening the asset base of their own businesses and injecting a substantial element of private ownership into the new towns.
I now turn to the Commission for the New Towns. Some of my hon. Friends have expressed concern that the rate of withdrawal by the commission is not proceeding fast enough. I assure them that the commission is undertaking a major programme of sales, and will have made disposals worth approximately £100 million by the end of this financial year. That represents a substantial proportion of the total disposals of the new towns as a whole. The commission is also making progress in its negotiations for the transfer of its town centre management responsibilities and other residual assets and liabilities to the district councils concerned.
As part of its wind-down programme the commission has decided to close its local offices, except at Corby, and


to concentrate at its London headquarters from next January. This will permit significant staff savings. I am satisfied that an orderly but continuous process of rentrenchment by the commission is taking place, and that this will be carried through.
A number of hon. Members—one has already raised the subject—will, I am sure, want to raise the question of the contribution that the new towns can make to mitigate unemployment. Without exception, every new town has generated significant employment opportunities in both the manufacturing and service sectors. The contribution that the new towns have made to creating job opportunities has invariably been not just of local but of regional significance.
During the first three years of this Government we estimate that in the English new towns the development corporations and the commission will have generated almost 2 million sq ft of office space, more than 3 million sq ft of shopping space and 20 million sq ft of industrial space, which is a considerable development achievement. Despite the recession, the overwhelming proportion of this space has been successfully let.
At the same time a major contribution has been made to meeting the needs of small firms. Highly successful small nursery unit estates have been completed in towns such as Peterborough, Warrington, Telford and Washington for small firms wanting units of under 2, 000 sq ft in which to get started. I have visited a number of these. They are the most vivid illustration of the potential of small business to provide new job opportunities. Altogether, we estimate that the English new towns have been creating approximately 20, 000 job opportunities a year in each of the last three years, which is a very material contribution indeed.
I come now to housing in the new towns. The Government consider that a significant and rapid increase in the proportion of home ownership in the new towns is desirable and necessary. I am glad to say that, without exception, all the new towns are making a significant contribution to our low-cost home ownership programme.
Since June 1979, the 11 English new towns still with housing responsibilities have released nearly 1, 300 acres to private house builders. That is sufficient land for more than 14, 000 owner-occupied dwellings. A sign of the confidence that private house builders have in the new towns is the scale of private house building taking place. At Warrington, for example, 16 house builders are building about 2, 000 dwellings on 25 different sites. At Milton Keynes about 35 house builders are building more than 3, 500 houses for sale on 45 sites.
The house builders are doing a great deal to provide homes to buy at a wide range of different prices. At the lowest end of the price range they are being imaginative and skilful in providing starter homes that young first-time buyers with relatively small incomes can afford. For example, right now one-bedroom starter homes are available for sale in central Lancashire for £15, 500. Even in Basildon, in the more expensive South-East, starter homes can be bought for just over £17, 000. Those prices are certainly within the reach of young couples and single people with fairly modest earnings.
As well as building for outright sale, all the new towns have now launched their own shared ownership schemes, thereby bringing home ownership well within reach of

those with below average industrial earnings. The comparative costs of buying on a shared ownership basis as opposed to renting are in some parts of the country now remarkably close. I noticed, for instance, in an advertisement put out by Washington new town last year that the weekly cost of buying a new house in Washington on a 50 per cent. shared ownership basis is almost identical to renting the same house.
The new towns have drawn up their own standard shared ownership lease in agreement with the Building Societies Association. This has helped considerably in securing building society mortgage finance for new town shared ownership schemes and is enabling more schemes to go ahead.
At Northampton the corporation expects private developers to build about 200 houses each year for shared ownership in the next few years. At Milton Keynes alone, about 700 houses for shared ownership are expected to start this year. I expect to see a significant increase in shared ownership opportunities in the new towns over the next year or so.
Some new towns, such as Skelmersdale, are making substantial use of homesteading—the sale of dilapidated or badly vandalised houses or flats for improvement by the purchasers. Skelmersdale and Telford have demonstrated vividly that dwellings that have become difficult, if not impossible, to let can be brought rapidly back into use if authorities will release them for sale and let young couples do them up. What the purchasers have achieved with these houses is remarkable as I have seen in Skelmersdale. I hope that more local authorities will take a leaf out of their book.
Lastly, there has been a remarkable response from sitting new town tenants to the opportunity that the Government have given them to buy their houses and flats on favourable terms. By the end of last December, nearly 8, 000 new town tenants in the 11 English new towns had already completed their purchase. Since the Government came to office two and a half years ago, about 14 per cent. of new town tenants—one tenant in every seven—had either completed the purchase of their homes or were firmly negotiating to do so.
There are seven new towns where the proportion of tenants who have either bought or are firmly negotiating to do so is already more than 10 per cent. They are Basildon, Northampton, Peterborough, Warrington, Runcorn, Skelmersdale and Telford. In Peterborough the percentage is 21 per cent. and in Skelmersdale it is a remarkable 25 per cent. Indeed, in Skelmersdale the proportion of owner-occupation in the town as a whole is already one-third higher than it was when the Government came to office two and a half years ago.
There is no question but that, as a result of the initiatives that we have taken, an unprecedented and much-needed upsurge in home ownership in the new towns is taking place. Indeed, I believe that by the end of this Parliament there will have taken place probably the biggest single growth of home ownership in the new towns in any Parliament in the post-war period.
Although the new towns programme is drawing to a close, I am sure that both sides of the House recognise the key contribution that the new towns have made over the past 30 years to the provision of new housing and job opportunities and to creating a better living and working environment for the hundreds of thousands of families who have chosen to move to the new towns and who, by and


large, do not regret their decision. The Bill is essential to help the new town programme to be satisfactorily rounded off. I therefore ask the House to give it a Second Reading.

Mr. Ted Graham: First, let me say that the Opposition will give the Bill an unopposed Second Reading.
I made my first speech from the Dispatch Box for the Opposition on the Third Reading of the previous New Towns Bill. On that occasion the Minister asked the House for permission to increase the borrowing limit from £3, 250 million to a maximum of £4 million. He stated:
The length of time that the proposed increase in the borrowing limit of £750 million will last is difficult to estimate with precision, but it should suffice at least until the end of 1983."—[Official Report, 6 June 1980; Vol. 985, c. 1865.]
We are now told that the moneys will last only until the late spring of 1982. How did the Minister get his sums so wrong 18 months ago? If, as he has just said, he expects the upper limit to last for two years, how can we believe that that figure is correct in the light of his failure to get the figures right 18 months ago?
We are told that the moneys that we are being asked to approve are to be used to finance housing, sewerage, roads, and other local expenditure. No one on the Opposition Benches would cavil at the list of items for which the money is required—completing, as the Minister said, shop centres at Peterborough, the railway station at Milton Keynes, the town centre at Telford, and the industrial area at Corby. We are certainly in favour of all those projects. However, we are dead set against the crazy economics of the Government. The imperatives for any Government in seeking to provide decent homes must form part of a balanced programme. In my view and in that of the Opposition, the Government have gone overboard in one direction—housing—at the expense of criminally neglecting needs elsewhere.
In the new towns, especially those of the first and second generations, there is the spectre of second and third generations of the original families being forced to look elsewhere for homes. By turning off the tap of finance for building new homes, and by stimulating the sale of existing homes, thousands of young couples are being squeezed out, and cannot live in the new towns where they were born.
I hope that we shall be told not only about the number of houses that are being sold but about the number of people who are on the waiting lists. At Easington in Durham there were 8, 000 people on the waiting list last year; at Warrington there were 2, 000; at Hemel Hempstead 4, 000; at Sedgefield 3, 000. For Basildon the figure that I was given by the Library was 3, 440. So what hope is there for young couples under the Government's policy in new towns of selling houses and building fewer and fewer new houses?

Mr. Anthony Steen: Does the hon. Gentleman agree that a rather curious paradox has arisen, in the inner areas of old industrial areas, such as Liverpool, where houses were demolished and people moved out, many of them to new towns? Those people now live out in the new towns, and the inner area of Liverpool has about 2, 400 council units which are empty. Does he think that some of the people on the waiting lists in the new towns should be encouraged to go back to the industrial areas? Is that what he wants?

Mr. Graham: I want a decent home to he made available for every young couple, or not-so-young couple, wherever they want it. Families who have lived all their lives, 20 or 25 years, in a new town should have the opportunity, if they wish, to occupy a council house for rent in a new town.

Mr. John Evans: Is my hon. Friend aware that in the new town of Warrington, which I represent, there is much resentment on the part of citizens who have lived there all their lives because the new town regulations preclude them from having a new town house to rent? The regulations say that people have to move into the Warrington area before they can get a house. That resentment has been increased because the strangers who moved into the area to rent a house are now purchasing those houses. People who were trying to get a new house in Warrington three years ago still cannot get one, and they see newcomers purchasing the houses that were originally rented.

Mr. Graham: I thank my hon. Friend for what he says, and I am sure that contributions from other of my hon. Friends will amplify that. The Government, in accordance with their own political imperatives, are concentrating too much on the present, satisfying the laudable ambitions of tenants to become owner-occupiers. They give too little attention to the needs of the children of those former tenants who look to the local authorities in new towns to provide houses for rent.
I hope that the Minister who replies will deal with the conundrum inherent in the Government's policy of encouraging the sale of council houses, and at the same time seeking—in our view, inadequately—to meet the needs of those who need homes. The Secretary of State confirmed to the Select Committee on the Environment the equation that a council has to sell 12 homes to have enough capital to build one new house. If that equation is riot correct, the Minister should tell us the correct equation. It is the economics of the madhouse whereby an authority, to get sufficient capital receipts, has to be encouraged to sell so many houses.
The Labour Party has played a notable part in the history and development of the new town movement. Since 1945, despite the changes of Government, new towns have gone from strength to strength. It is, therefore, no part of Labour's case today to examine in detail or comment on the intricate pattern of control and management that hitherto has been generally accepted as a soundly based system, enabling Government to create and sustain new towns. I am grateful to the Minister for his advance notice that a paper will be published before the Summer Recess to explain to the House and the country changes in the financing of new towns. Labour Members will, of course, examine it with immense care and attention.
Although the Opposition have argued against the way in which the Government have sold industrial and commercial assets, we have expressed more than once our concern at the problems that have been caused, particularly for the small business man and the small shopkeeper. Sales of individual freeholds are not permitted. As a result, the shopkeeper or business man either has to join a consortium or bid for the freehold of a huge block. I know from inquiries that I have made in new towns that shopkeepers are angry and bitter. The chemist or the greengrocer has been gullible. He has


listened to the propaganda of the Conservative Party telling him that it would enable him, the shopkeeper or the business man, to buy the freehold of his property.
The Minister should tell us what steps he intends to take to protect the interests of the small shopkeeper. It is no good telling him to join a consortium, because the block of shops may be bought by a speculator who wants only to make a profit. Instead of ending up with a benevolent landlord, the small shopkepper may end up with the worst possible landlord.
The Opposition remain unconvinced that it is in the best interest of new towns to be cajoled and suborned by Government pressure to flog off assets that they wish to retain—not least because they form part of a balanced and profitable property portfolio.
We have been told that there is a programme. I hope, therefore, that the Minister will answer the following question. It relates, in part, to what was said by my hon. Friend the Member for Newton (Mr. Evans). Will he tell us the total of capital receipts obtained by new towns that are forced to dispose of commercial and industrial properties at the behest of the Government, acting under the powers in the Local Government, Planning and Land (No. 2) Act? I accept that there is a quibble. We argue that the new towns are being forced, and the Minister has assured us more than once that they will not be sold at commercially disadvantageous terms. I hope that the Minister will give us the total figures.
The Under-Secretary of State—not the present holder of that office, but his predecessor, the hon. Member for Hampstead (Mr. Finsberg)—told a Committee on 6 May, when the New Towns (Limit on Borrowing) Order 1981 was being debated, that some of the proceeds from these sales were being used to support investment in other new towns. We would not take exception to taxpayers' money invested in Basildon being realised and reinvested in other new towns or urban development corporations. In Committee, Opposition Members argued for that. Will the Minister give the precise figure and the proportion of new investment represented by that rolled-over capital? We do not want generalisations and we do not want to be told that the money comes in and goes out. On Second Reading, such figures should be available and we should know how much money from the sale of assets in one place has been spent in another. Will the Minister give a categoric assurance that no assets have been sold on commercially disadvantageous terms as a result of the recession, so that the Government can meet their targets and reduce the public sector borrowing requirement?
We understand that under the system every area is given a target. If the advice given to an authority by its valuers and others is that it is not the right time to sell, what steps will the Government take? Will they waive their requirement to produce £10 million or £20 million, or will they say that the overall imperative demands that authorities should sell on disadvantageous terms? The only justification for selling assets, particularly in the Government's way, would be if private ownership could manage them more effectively and to general advantage. There has never been a shred of evidence to support the Government's contention, but only dogma, malice and spite.
It is extremely hard to understand the Government's oft-trumpeted cry that they believe in economic efficiency.
New towns are successful, but, alas, according to the Government they are fatally flawed because they are successful public enterprises. The pieces of the Government's jigsaw on new town policy do not fit, even if we accept that the Government are cobbling it together as they go along. I hope that the Minister will seriously attempt to put the sale of industrial and commercial assets in context. I refer to house building, community developments and commercial viability. I hope that the Government will not fob us off with generalisations. The situation is far too serious for that.
The Government do not need to be reminded that they have left a sour taste in the mouths of first generation new towns as a result of their handling of section 10 claims. First generation new towns accepted the hand-over of corporation housing on the clear commitment in section 10 of the agreements that the Government would reimburse district councils for repairs and renovations arising from inherent design faults. The miserable tale has caused intense frustration and anger. The scale of potential calamity is catastrophic and the delays in settling claims do not reflect any credit on the Government. The closure of the National Building Agency by Government diktat has not helped. The Minister seemed to say that that was almost an act of God over which the Government had no control. The delays will be a direct result of the Government's action. The report that will be placed before the Minister in May will give him an opportunity to change that atmosphere of distrust. Before the Minister accepts the detailed report I hope that he will allow new towns to discuss the NBA report on housing. I hope that we shall not be told that the local authority has stated the amount necessary to put any defects right, that the NBA has given its figures and that the Minister has accepted the NBA report without having given the local authority an opportunity to challenge the NBA's figures.
For example, if an authority estimates that the cost of correcting defects is £7 million and the NBA claims that the cost should be £5 million, the Minister may decide that he will provide only 40 per cent.—£2 million—of the £5 million figure. If it is discovered that £7 million is needed to put right the defects, who will pick up the £5 million tab? The answer is the local authority. The Minister has arbitrarily decided to delete certain subjects from consideration. We cannot understand that. The Minister has excluded all matters and works outside the four walls of a dwelling from consideration under section 10. For example, he has excluded the estate sewers, drains, garages and garage compounds. However, when the agreement was made they were part of the development that it was agreed should be taken into account.
The Minister has alluded more than once to the fact that the HIP allocations for new towns contain an element that will help them in the meantime to deal with section 10 claims. New town officials have met that with disbelief, not least because Department of the Environment officials have shown a marked reluctance or inability to identify those allowances. For example, Stevenage asked for £5·8 million in its HIP allocation. It has been given £2·8 million. However, it has not been told that that £2·8 million contains an element of £500, 000, £1 million, or whatever, for use towards putting right section 10 claims. The Minister should resolve the problem quickly and sympathetically. He should not present councils with a fait accompli, and a cut and dried, take-it-or-leave-it decision.
The Minister, who has been listening attentively to the debate, will be visiting Peterlee towards the end of the week. He will know that he is the third housing Minister to visit it in the past two years. I assure him that he, personally, will be warmly received. However, Peterlee and Easington do not want visits from Ministers, but speedy action and money to put right the defects that they know about.

Mr. John Evans: Send them a cheque.

Mr. Graham: My hon. Friend is right. The Minister can do those towns and those who live in the area a great service. He should not ignore the fact that second generation new towns are dragging their feet. They will not enter into anything like a section 10 arrangement because of the treatment given to first generation new towns.
The new towns resent the fact that the Government, in dealing with the block grant and other financial matters, have failed to consider certain factors. New towns are grateful and relieved that the Government's decision about the E7 housing factor will marginally ameliorate the financial situation of new towns. However, those who represent new towns in the London ring have pressed the Minister to give proper weight to factors such as the cost arising from the planning of new towns, the large amount of open space, communal shrubberies and, in particular, the need to create a community and services for the young.
No doubt the Minister has perceived that as much as two-thirds of the difference between the needs of new towns and the woefully inadequate grant-related expenditure is accounted for under the two heads of planning new towns and looking after the population. Will the Government try to adjust the GREs for new towns to take such wholly exceptional expenditure into account?
I must tell the Minister that nowhere more than in the new towns is there complete incomprehension of the basis for GREs. I quote some of the comments that have been made to me recently by chief officers in new towns. They include "suspect and unreliable", 
inexplicable and widely varying assessments
and
unrelated to the acual spending needs of the district".
Those are not generalities. I would be pleased to tell the Minister the names of the chief officers who made those points. It is seriously being asked whether there is a conscious vendetta against new towns because of the way in which the Minister and his colleagues are refusing to adjust the assessments. The volte-face towards new towns by the Government since May 1979 is causing pain, anger and despair in many of them.
In conclusion, our central charge is that within the general onslaught made by the Government on local government across Britain, piling impossible imposts on already intolerable burdens, they refuse to acknowledge the special factors affecting new towns, arising from their demographic profile, or problems stemming from the base of their funding.
When the Government produced their incomprehensible formula for block grant aid to authorities, they did not hesitate to involve the most detailed yardsticks and measuring rods to prod local authority spending into line. All local government across the geographical and political spectrum has bitterly protested at the depth of interference

into local management of local affairs by the Government, a Government who profess to give freedom to councils to run their affairs in their own way.
When I urged the Secretary of State to interfere a little more so that the special financial problems of new towns could be given due weight, his hon. Friend, the then Under-Secretary of State, said to me in a letter of April 1981:
It would not be possible w adjust targets for individual authorities to reflect particular circumstances such as population growth without becoming involved to an unacceptable degree in the decision-making of those authorities.
That is claptrap. Where there is a will there is a way.
When the Government choose, they do not hesitate to differentiate between the shires and inner urban areas. If they wished to give weight, in adjustment of GRE assessments, to a class of authority such as new towns or a class of authority with peculiar, significant population factors—which would include most new towns—they could do so. The only stumbling block is the refusal to help. That is deplorable and is no credit to the Government, the system or the Ministers responsible.
The Labour Party has always accepted that in due time the forms of central direction and control via the Commission for the New Towns, and below that the individual development corporations, would be loosened and changed. The creation of living, vibrant communities primarily as a result of public initiatives and public capital has never blinded us to the reality that taxpayers' investment requires prudent handling, a proper return and a justified role. During the years, under both Governments, we have seen the new towns blossom into a large sector of British life and achievement.
That background gives the Opposition satisfaction. We are proud to say that we have played a major part in the growth of what we know as the new towns movement.

Mr. Christopher Murphy: I support the Bill in the hope that it will assist in bringing about an early normalisation of the new towns. I speak as one privileged to represent two first generation new towns, Welwyn Garden City and Hatfield. The Government should adopt the slogan "Normality for every municipality". The concept of the new town has in many ways proved to be successful in dealing with the circumstances that faced Britain. To support that statement, I quote an independent assessment by Taylor and Chave in their book on the environment:
By conventional standards a new town is a good society. It is happy and healthy.
Although the end product has produced considerable advantages, many disadvantages must still be overcome. The measure before the House may help to achieve that aim. However, in making certain criticisms, it would be wrong not to recognise the benefits inherent in the building of "garden cities" outside urban areas and the results of the way in which that approach has been subsequently developed.
When Ebenezer Howard first postulated his theories, he saw the logic in transferring people to such garden cities, reducing the population density of the inner city and then renovating and rejuvenating the city centre to an overall plan. There is no doubt that the green belt and decentralised town have been pursued vigorously, but the other side of the equation—the inner city aspect—has been, and has become, neglected. It is therefore to the


credit of the Government that such neglect is now being overcome with the constructive policies of enterprise zones and urban development corporations. It is also to the credit of the Government that the outstanding problems of the new towns are being tackled firmly.
Ebenezer Howard based the financial realisation of his plans on private enterprise, but the post-war new towns movement was entrenched in the public sector. Hence, the unfortunate need for the Bill. The new towns were very much established as authoritarian organisations acting as estate developers and owners, but they held on to their property investments.
It should be noted that that was not the only way to secure such co-ordinated development. Abroad, new town development commissions have had a three-pronged function—land assembly, land planning and land disposal. Rather than raising finance for the purchase of land and the provision of infrastructure and then taking advantage of the skills and expertise of private enterprise to develop the town and sell the properties, we in Britain have erred on the side of almost total public sector involvement. For that reason, to see the task through coherently, the Bill appears necessary.
To achieve a more satisfactory outcome, it must be right to sell the new town assets, be they commercial or domestic property, to give an opportunity to local people to have a stake in their environment. Thus, the imbalance in ownership can be redressed and the benefits of private capital given to the town, albeit it at a later stage with the resultant reduction in taxpayers' contributions and the reduced need for further new towns Bills.
Some of the problems that have been faced in the first generation new towns relate to the assets. Their sale is taking place with an alarming lack of speed. The future of the so-called common parts has still to be settled. Those properties not yet for sale have excessively high rents imposed upon them. The homes transferred to district councils still await the final outcome of claims for section 10 grants. The consequent high level of local authority housing has had a disproportionate effect on the rate support grant because of the E7 factor—now, thankfully, ameliorated. The high rateable value created in a county such as Hertfordshire by the new towns and their properties produces a current imbalance in the rate support grant under existing formulae, with resultant threats to services, such as education. There is a need for consideration of a special new town element in assessing future rate support grants. Those are matters of great importance to my constituents and many others similarly affected.
However, my support for the Bill is tinged with considerable regret. That regret centres on the way in which new towns are administered, and particularly the continuing presence of the Commission for the New Towns. Because of the State's involvement in the development of new towns in the aftermath of the Second World War, it was decided to instigate development corporations that would act as separate entitles from the local authorities and be funded separately by Whitehall. As a town matured, the functions of the corporation were transferred to the NCT, but there the process seems to have foundered.
Inevitably, this measure will assist the continuing administrative costs of the NCT. It is right on this occasion

to ask how long this quango will be allowed to continue, recognising that its tasks with respect to the development of first generation new towns should be diminishing day by day. Quangos are born with ease, grow effortlessly, but are "a long time a-dying".
It would be wrong to be totally dismissive of the NCT's efforts in the past, but equally it would be wrong to condone what is becoming an increasingly undemocratic aspect of new towns. An important element of taxation without representation exists for tenants and local people generally. The experiment of the new towns has undoubtedly achieved much for the people whom it sought to help, although at a high price in terms of countryside lost and urban decay.
I return to the assessment by Taylor and Chave, who say:
Its families have good homes. Its children have good schools. Work is varied and close at hand. Working conditions are good. There are wide facilities for active recreation. The strains of industrial life are reduced to a degree not achieved in unplanned communities.
The House can take pride in that assessment.
I support the Bill, but I do so with a firm request that the Government take urgent action to deal with the problems that I have raised which result from the situation regarding the assets of new towns. I also express my firm belief that in the two new towns that I represent the time has come to say
never send to know for whom the bell tolls"—
it tolls for the NCT.

Mr. Stanley Newens: Like those hon. Members who have already spoken, I support the Bill. Its effect is to provide further sums of money for the funding of new towns, which represent a highly successful and proven form of urban development.
As an hon. Member representing a new town, I am anxious because in other respects, whether by accident or design, the Government have inflicted grave damage on new towns, especially those such as Harlow, which I represent and which is regarded as completed.
As my hon. Friend the Member for Edmonton (Mr. Graham) has said, the method of determining rate support grant which the Government have adopted has failed to take into account the specific features of new towns, with the result that many have been severely penalised in rate support grant settlements. For example, in 1981, six of the seven London new towns lost about £6 million of the £8 million paid to them the previous year. As if that were not enough, the Government have also deprived new towns of substantial housing subsidies and have delayed the settlement of outstanding claims made under section 10 of the New Towns (Amendment) Act 1976.
On this issue concerning the provision of funds to remedy design defects of housing assets transferred to local authorities from development corporations the Government have procrastinated and passed the settlement of claims to the National Building Agency and then decided to abolish that agency. They now say that they hope that the result will be reached by May this year. I very much hope that it will, but the delay which they have already inflicted has meant that people have been forced to live in houses with serious structural design problems. They have been forced to put up with that and are continuing to do so.
The position in new towns now is that, but for the change in the treatment of the E7 factor which governs the assessment to housing revenue for rate support grant purposes, new towns such as Harlow would have been faced with catastrophic losses of income this year. The formula by which the rate support grant is determined fails to take into account the special features of new towns, and to allow for them. The result has been that all new town local authorities, even those under Conservative control, are apt to be regarded, quite unjustly, as high spenders. The fact that new towns have only recently acquired amenities and therefore face higher interest charges and other costs than older towns that were able to begin purchasing such amenities many years ago is not provided for in the present formula. The fact that most new towns have large open spaces that have to be maintained, although they are not available for sale or development, is overlooked. The fact that new towns face a succession of problems that arise very rapidly, due first to the large number of children in those areas, then to the number of old people, and so on, is not reflected in the present rate support grant formula.
A case exists for a special new towns factor to be incorporated in the rate support grant formula to ensure that new towns are not in danger in the future of being starved of funds when the development corporations are wound up.
The Government have not only sought to reduce expenditure on new towns. They have also endeavoured to squeeze money out of them in various ways. They have done that, first, by the sale of assets, to which the Minister referred. In speaking of this, the Minister could not give full details. I remind him that when I have tabled parliamentary questions the full details have been refused for a variety of reasons. I believe that the Government have been so tardy about coming forward with the information because their hopes for the success of this policy have never been fully realised on the terms in which the Government originally stated it.
The Minister said that private capital has been attracted to new towns. To a certain extent, I agree that that is true, but not in all areas. However, as my hon. Friend the Member for Edmonton said and the Minister conceded, small industrial or commercial owner-occupiers have often been denied the right to buy and in some cases have had their premises sold over their heads. That is not a good record for a Government endeavouring to posture as the friend of small business men. The same criticism applies to rents.
The Government have been prepared to allow an outrageous increase in industrial and commercial rents to be put forward which, in the CNT towns, can no longer be discussed at local level. The hon. Member for Welwyn and Hatfield (Mr. Murphy) should remember that the Conservative Government were responsible for the way in which those issues have been shifted to the New Towns Commission, and did not consider the fact that there would not be local availability, as there should have been. I have raised the question of rent increases with the local office in Harlow. Although I have no complaint against the people there, they have had to pass my query on and I am still awaiting a reply.

Mr. Nicholas Lyell: Does the hon. Gentleman agree that it is desirable that the Government should encourage the Commission for the

New Towns, in its negotiations with those businesses that would wish to purchase their premises, to take a reasonable attitude when marriage values—difference in values of premises when they are let and when the tenant and landlord are the same—come to be considered? Will the hon. Gentleman agree that a reasonable attitude should be taken so that the occupiers of the premises have as swift and early an opportunity to purchase them on as many occasions as possible?

Mr. Newens: I am not a great advocate of the sale of public property, but if there are to be sales I agree with the hon. and learned Member for Hemel Hempstead (Mr. Lyell) that the owner-occupiers ought to have not only a prior but a better and more favourable opportunity than outsiders. I hope that the Minister will listen to the hon. and learned Member and me.
The accusation made by the hon. Member for Welwyn and Hatfield against the Commission for the New Towns should be considered, bearing in mind that it is unable to function properly because the Government have not given it the lease of life that would enable it to. For example, an advertisement recently appeared for staff to take on temporary positions. Even in the present situation, the best qualified staff will not go for temporary positions and, in those circumstances, the commission will be unable to act as a driving force in new town affairs. There is still nothing to replace it.
The Minister referred to jobs created, but it is clear that he now presides over the running-down of the system and much of the drive originally available in new towns has been destroyed because of the policies pursued by his Department.
Problems are not confined to small business men because many large operators encounter similar difficulties. The prices of freeholds are unattractive to many larger industrialists. It is infinitely better for town premises to be owned by those concerned with the locality—whether a development corporation, new town commission or an industrialist—rather than a finance organisation that is more interested in the return on its investments.
Increased rents represent an issue of considerable concern to all industrialists and other business men. I hope that the Minister will take note of that and will not continue making tremendous noises about the imposition of high rates on businesses, when the Government are responsible for allowing a policy that imposes considerably increased rents on business men.
The Government still have no clear idea of what they will do with the industrial and commercial assets now held by the commission, which cannot be disposed of before the dissolution occurs. They are still resisting, for doctrinaire reasons, the transfer of commercial assets that will never make a sufficient profit to attract private buyers to local authorities. The authorities should refuse the Government's policy in that respect, particularly if they are concerned about democracy and local control.
On the other hand, local authorities are unprepared to accept all the amenities that will be prime loss-makers unless the Government provide the financial means whereby the amenities can be adequately supported. Authorities will not be taken for a ride on that issue, whatever the Government suggest.
The Government now face many problems in new towns which they cannot resolve with their present policies without doing considerable damage. The Minister claimed


that there were increased opportunities for would-be home buyers. I hope that he will recognise that his policy has also greatly diminished opportunities for those who need, but cannot afford to buy, homes. That includes not only those wanting their first home, but those accommodated in flats who wish to obtain the tenancy of a house with a garden, which is the justifiable aspiration of many of my constituents and of many living in new towns.
Labour Governments always provided houses for people to buy in new towns, as well as to rent, but a new problem is being created by the growing waiting list of those who cannot afford to buy and for whom there is no house available to let.
The Bill aims at providing more funds for new towns and that should be supported. However, I hope that it will not be used to obscure the great damage being done to new towns by the Government's general policies. I hope that the next Labour Government will make funds available, and make it possible for new towns to resume the forward march on all fronts that the Labour Government first launched in 1946.

Mr. K. Harvey Proctor: I cannot agree with the hon. Member for Harlow (Mr. Newens) in his strictures on the Government about the great damage he alleges that the Government have done to new towns in the past two and a half years. It is really the reverse, and I shall try to develop some of the success stories of new towns during my speech.
I welcome and support the Second Reading of the Bill. It underlines the Government's commitment to the development of new towns. I also support the comments of my hon. Friend the Member for Welwyn and Hatfield (Mr. Murphy) about the normality of the new town's position. The sooner that new towns are fully developed, the better. That will not be disputed. I support the Bill for providing a modest increase in the borrowing limits of the new town development corporations. I also welcome the Minister's commitment to a study of the borrowing system by those corporations and his undertaking that, before the Summer Recess, he will make a statement. I shall press my hon. Friend the Under-Secretary of State, who is to reply, on the form of the study and its outcome. Will the result be a Green or White Paper or a ministerial statement with a departmental paper attached? I should be interested in an answer to that question.

Mr. Graham: It will be a diktat.

Mr. Proctor: The hon. Gentleman said that it will be a "diktat", but, when the Minister produces the statement, we shall discuss it with him. This is not a "diktat" House.
I shall say a few words about housing in new towns. I was astonished to hear the hon. Member for Harlow say that the Labour Party had always provided purchase opportunities in new towns. I think that is what he said. It is a remarkable boast. In my constituency and in new town constituencies throughout the country the great political argument during the 1979 election—in the new town in my constituency it was perhaps the political divide—was whether the Government of the day would give the right to sitting tenants to buy the homes in which

they lived. In my constituency and in many new town constituencies the electorate gave an overwhelming answer to the question that was posed.

Mr. Newens: Will the hon. Gentleman confirm that development corporations built houses in his new town and in mine explicitly for the purpose of sale to would-be owner-occupiers from the outset, and that those houses were never offered for rent? We are talking not about sales to sitting tenants but about sales generally. Surely the hon. Gentleman will confirm that houses for sale were made available from the outset and that the Labour Party has always been anxious that 100 per cent. mortgages and excellent mortgage conditions generally should be provided for would-be buyers.

Mr. Proctor: I am not disputing what the hon. Gentleman says. The great issue during the 1979 election was whether sitting tenants should buy their own homes. The electorate gave the answer in new town and other constituencies.
New towns under successive Governments have shown great adaptability in responding to Government policy. It is true that the switch in the balance from homes for rent to homes for sale has been demonstrated markedly in new towns compared with a number of local authorities which have tried to flout the law on the sale of houses. The London borough of Waltham Forest owns a number of houses and other homes in Billericay and Wickford. My constituents have had great difficulty in obtaining the right to buy, despite the law of the land. I am pleased that they are now being allowed to buy, albeit incredibly slowly.
In new towns there has been enthusiasm in the private sector among those who, without Government policy, might never have contemplated house purchase. The hon. Member for Edmonton (Mr. Graham), in a rather exquisite phrase, talked about "flogging off" assets. From May 1979 to September 1981, 6, 646 dwellings have been sold by new town development corporations, and firm negotiations are in hand for the sale of a further 4, 783 houses. My hon. Friend the Minister has updated the figures that were given to me in a written answer on 8 December 1981. He said that by the end of December nearly 8, 000 dwellings had been sold. The demand for sale continues. It is not a one-off, one-year adventure. It is a continuing rolling programme. My hon. Friend said that 14 per cent. of new town tenants have completed or are firmly negotiating for the purchase of their homes. That is a remarkable achievement.
In Basildon, which leads the way in the purchase of new town homes, 2, 331 of my constituents have purchased their own homes from the development corporation, and a further 700 applications to buy are being processed. I understand that a further 641 homes have already been sold by the district council and that it has another 260 in the pipeline. That demonstrates clearly that the wish of many of my constituents to purchase the homes of their selection has been translated into practice. The promises made during the 1979 election have been honoured.

Mr. Graham: I do not dispute the figures, because the hon. Gentleman obviously lives with them and knows them very well. However, will he comment on what has happened to Basildon's housing waiting list over a comparable period?

Mr. Proctor: There are over 3, 000 on the waiting list in my constituency. There will always be a waiting list for


an item that is subsidised. There will obviously be a waiting list for anything that is subsidised. That is an example of the law of supply and demand that even Labour Members cannot suspend for their ideological endeavours.

Mr. John Evans: The Minister has boasted that one-bedroom starter homes are being built for £15, 500 in the North of England and for about £17, 500 in the South of England. Does not the hon. Gentleman consider it immoral that those on the waiting lists should be invited to purchase one-bedroom starter homes at £15, 500 to £17, 500 when others, more fortunate, are able to purchase three-bedroom semi-detached houses for £7, 500 to £8, 000? Does he agree that there is great immorality in that sort of transaction?

Mr. Proctor: There is a division of opinion between the hon. Gentleman and his right hon. and hon. Friends and myself. I think that most of his right hon. and hon. Friends would prefer to see people in rented accommodation, whereas my right hon. and hon. Friends would prefer to see increasing numbers in their own private accommodation.

Mr. Evans: No.

Mr. Proctor: The difference between the parties on this issue is being demonstrated clearly in the debate. The housing departments in Basildon, the development corporation and the district council are to be congratulated on the part that they have played in bringing home ownership within the reach of thousands of my constituents. Similarly, development corporations and district councils throughout the country are to be congratulated. We must add to this achievement the low cost schemes for house purchase, including shared house purchase, joint development with private developers and starter homes which, in my constituency, range from about £17, 000. Basildon has taken the lead in shared purchase, and 30 contracts have already been signed for shared purchase schemes. I understand that 110 homes have been set aside for the schemes and that 300 applications have been received. At present the scheme does not apply to rented accommodation. A great success story is in its initial stages. I hope that there will be more shared purchase schemes in my constituency and in many other constituencies in due course.
Partnership arrangements, shared ownership and reduction in land prices for those on the waiting lists are the Government's initiatives and represent a success story. The schemes were pioneered by the Government, development corporations, developers and building societies, especially in Basildon. For example, the Abbey National Building Society has provided the funding and lubrication of mortgages for the private sector.
Of course, there are housing difficulties in new towns, particularly with regard to the elderly and the provision of single person accommodation. A special survey of the elderly in Basildon revealed that there was a shortfall of special old-age pensioner accommodation of about 528 units, of which 414 are of the sheltered housing type. Projections for 1989 are 1, 436 and 896 units, respectively, and for 1994, 1, 804 and 1, 094 units, respectively.
In common with many new towns, the population of Basildon is growing old. It is growing older at a faster rate than other towns. Nevertheless, the council is experimenting with build-for-sale sheltered housing schemes. Thirty

units have been provided, with possibly another 30 units if the initial scheme is a success. Already a great deal of interest has been shown, even before the scheme has been marketed.
I turn to commercial and industrial matters. Housing is not the only success story for new towns and their development corporations. My hon. Friend the Minister referred to the Western Approach road at Basildon, which is provided for and funded by the Bill. That will be very helpful to my constituency. Development corporations, in conjunction with private developers and finance, are expanding the commercial and industrial assets of the new towns.
My hon. Friend also mentioned that in Basildon, with the aid of Norwich Union, the development corporation is constructing what will become the biggest and best shopping centre in the South-East of England. The second phase development is the logical follow-on of the Government's investment in roads two years ago relating to the town centre development—then at a cost of about £1½ million, which is provided for in the New Towns Act 1980. That has led directly to a £65 million investment, which will provide jobs in my constituency, including jobs in the construction industry. However, as my hon. Friend said, the experience in Basildon is not unique.
I have a number of questions to put to my hon. Friend who will be replying to this important debate. The hon. Member for Newton (Mr. Evans) asked my hon. Friend about the sale of assets. Clearly the hon. Gentlemen and his hon. Friend the Member for Edmonton were not adept at scrutinising Hansard in the few days just before Christmas. Otherwise, they might have seen a reply I received on 21 December, just before the Christmas haze came upon us. I asked my right hon. Friend the Secretary of State for the Environment
what proceeds to the Exchequer have derived from the sale of new town assets; and if he will make a statement.
My hon. Friend the Minister for Housing and Construction replied:
Between 1 April 1979 and 30 September 1981 £212 million had been realised from the sale of industrial and commercial assets in the English new towns. We estimate that about £40 million will have been paid to the Exchequer in tax. A further £21 million has been paid into the national loans fund to redeem debt. The remaining benefit to the Exchequer has been a reduction in the call on the Exchequer to finance the new towns' investment programmes."—[Official Report, 21 December 1981; Vol. 15. c. 318.]
I hope that that answers some of the questions posed by hon. Members. No doubt those figures will be confirmed by my hon. Friend when he winds up. I should like to ask my hon. Friend whether the sale of assets could proceed faster and make a bigger contribution than at present.

Mr. Norman Hogg: The reason why the Government are unable to sell the assets faster than the development corporations is the recession that the Government's policies have created.

Mr. Proctor: Many of my constituents write to me saying that they want to buy an asset and that the. development corporation is being a little sticky about selling it. The demand is there. A firmer prod might result in a few more assets being sold in the not too distant future.
It is interesting that Opposition Members seem to be in a quandary about the sale of assets. On the one hand they want nothing to do with it, but on the other they want to make sure that their constituents have their fair slice of the


action. I am glad that they are on our side with regard to the sale of assets and that they are rightly defending their constituents who want to buy them.
Will my hon. Friend say a little about short-term borrowing from the private sector for development corporations? Will he give a little more freedom for them to negotiate with banks and other financial institutions to establish more private funding for new towns? Will he arrange for the limit of about £500, 000 on development corporations to be raised to a more reasonable figure of about £5 million? I should be grateful if my hon. Friend would say whether that it is possible.
My next question has been touched upon already by a number of hon. Members, including the hon. Member for Harlow and my hon. Friend the Member for Welwyn and Hatfield. The Bill allows for an increase in spending by development corporations, but there will be substantial financial consequences and implications for local authorities and their expenditure. Before Christmas a number of Members of Parliament representing new towns met. They wrote to my right hon. Friend the Secretary of State for the Environment about this point.

Mr. Newens: It was an all-party letter.

Mr. Proctor: That is right.
The seven London ring new towns have come together to demonstrate that decisions made by previous Governments, the present Government and individual development corporations about the sort of places that new towns should be have placed inescapable costs upon the councils concerned. At present those costs are not allowed for in the Government's view of what constitutes acceptable council spending or in the formula for calculating rate support grant. The pressure of population expansion in new towns must also be taken into account.
I should be grateful if my hon. Friend could answer some of my questions. I assure him of the support of Conservative Members for Ministers in the Department of the Environment for all that they do for new towns and their success and prosperity. Finally, I add a word of thanks to the staff of the development corporations for all the work that they do in our new town constituencies.

Mr. Norman Hogg: As has already been made clear, we do not intend to vote against the Bill. We welcome it, but at the same time it must be seen against the background of what the Government are doing to the new towns. I profoundly disagree with almost everything that was said by the hon. Member for Basildon (Mr. Proctor). I cannot see the success story to which he referred. It is not reflected in the Scottish new towns, and certainly not in Cumbernauld.

Mr. David Lambie: Does not my hon. Friend recognise that, according to the unemployment figures published today, my new town of Irvine has an unemployment rate of 24·7 per cent.? One in four of the population is unemployed and one in three of the male population is unemployed. That is not a success story. It is a story of disaster.

Mr. Hogg: The unemployment figures for all Scottish new towns are bad, but for Irvine new town they are particularly bad. My hon. Friend does well to draw

attention to them. The story is far from the success story to which we were treated by the hon. Member for Basildon.
The new towns are a success in one respect. They have brought high quality housing and the garden city concept, which has replaced the urban areas of our great cities of Glasgow and London. The planners have done an excellent job. It was proper of the Labour Government of 1945 to introduce legislation to provide for the new towns.
The story now is one of contraction. In my constituency, factory after factory has closed. We have redundancies upon redundancies in the factories that remain and many have introduced short-time working. Other factories, where we had hoped for expansion, have at best marked time. Later this week, the official receiver may sell the Lovable company of Cumbernauld, where over 300 women are presently employed. It is the second largest manufacturing industry after the Burrough corporation, which itself has had many redundancies over the past two and a half years. Many of my constituents will view these events with the gravest concern. If the work force at the Lovable factory choose to fight the redundancies it can be certain of my support and that of many of the people who live in Cumbernauld.
In addition, the Secretary of State for Scotland, who is not noted for dexterity in his handling of Scottish affairs, nor for good timing in dealing with matters of importance, has chosen today to announce that there will be rent increases of 22 per cent. in Scotland. That is against the background of a rate of inflation of 12 per cent. during the last year and an average increase in earnings of 11·3 per cent. As my hon. Friend the Member for Central Ayrshire (Mr. Lambie) said, new towns are facing massive unemployment. What justification is there for rent increases of 22 per cent. when the rate of inflation is considerably less? Why should the Secretary of State direct the new towns to increase rents to that level? It is disgraceful. I shall write to the Secretary of State about it and demand a meeting with him because I am certain that my constituents will be protesting loudly tonight over the imposition of these scurrilous rent increases.
It is not only local events that concern me. The overall picture is just as worrying. The Government want to undo the achievements of the new towns. Over the last 30 years, two and a half million people have been found homes in new towns, with a range of supporting services such as schools, health services, sporting and recreational facilities. We have heard from the Minister the extent to which industrial space has been provided for about 300, 000 jobs. He said that 12.5 million sq ft of office space has provided 60, 000 jobs and that 15 million sq ft of shopping area has provided 40, 000 jobs. That is funded by £3·2 billion worth of borrowing, and payments on loans are funded from the income on assets.
I am surprised that the Minister and those hon. Members who have endeavoured to present a success story have not said that the new towns have become profitable. In 1976—the most recent year for which I have been able to obtain figures—they made a profit of £8 million without any significant sale of assets. Assets are the great issue in the new towns at present. They have in hand about £500 million worth of assets, although some claim that the figure is as high as £1, 000 million. The Government, true to their mistaken dogma, insist that the assets should be sold, and the development corporations have been instructed to sell off property to the value of £120 million


for 1979–80 and £200 million for 1980–81. The hon. Member for Basildon drew our attention to the latest figures that he obtained in a written answer.
The Government are asking too much of the new towns. They are creating conditions whereby, if these assets are sold off, the capacity of the new towns to be profitable and self-sufficient will be seriously undermined. That is bad business. The Tory Party has now become the party of bad business. The Government want the new towns to sell off the assets, but if they do so they will be cutting off future income. The hon. Member for Basildon misunderstood my concern that the new towns are selling in a distressed market. I do not believe in selling off the assets, but the matter is made even worse if they are asked to sell them in a depressed market, because then the British taxpayer will get a bad deal.
The Bill increases the borrowing capability of new towns. I welcome that, but it must be seen against the background of what the Government have done. It is largely irrelevant, given the scale of the problem. There is massive unemployment in our new towns, particularly youth unemployment, which is even more of a problem in communities such as mine, where the average age of the citizens is 30. Now there are to be massive rent increases, a loss of manufacturing capacity, widespread asset-stripping and a conspiracy to cheat the taxpayer on the sale of assets. The Government's record on new towns is disgraceful. There is not the success story that they are attempting to present. I hope that the House will approve the Bill, but that it will do so knowing the Government's record.

6 pm

Mr. W. Benyon: I apologise to the House for my absence for a short time during the debate. Fashions come and fashions go. New towns, certainly in the official world, appear to have gone out of fashion in favour of inner city renewal. That worries me because the two are complementary. In London and the outer London ring, they go together. The new town of Milton Keynes has been an undoubted success from the social point of view and also commercially and industrially.
I have made a point of asking industrialists whether, had the infrastructure been available in central London and in docklands, they would have gone there in preference to Milton Keynes. Their answer has been "No". Certain factors influenced their decision to develop on a green field site. There was room for expansion, a whole new setup and good communications.
In the third generation of new towns, it is essential to keep a strong element of public rented housing. It has been calculated that over 30 per cent. of those going to the new city of Milton Keynes cannot afford a starter home or shared ownership. When they have been there for some time, have managed to get on their feet and are earning the level of wages available, they can look towards buying or other forms of ownership. Initially, to keep this large enterprise going, it is necessary to have a great deal of housing for rent. I hope that this will not be lost sight of in future allocations, particularly in relation to what is happening in the inner cities.
I was delighted to hear of the study which is being carried out—the results will be announced this summer—on the financing of future developments in new towns. This is excellent news. Hon. Members know of the difficulty faced not only by the present Government but by

successive Governments. It is sometimes described as the dead hand of the Treasury. The fact that moneys raised have to go back into the pot and are then reallocated militates against the successful economic and commercially viable development of new town financing.
It was always my hope, as a Conservative, that we would recreate the Commission for the New Towns as a properly run property company which would roll over its assets for development not only in future new towns but also in the development of the inner cities. However far one looks into the future, the sums of money that will be needed for this purpose will be considerable. If we are constantly to have to measure this element against other elements in public expenditure, we shall not achieve the results for which we all hope.
I hope it is not too late to reconsider the establishment of a properly based Commission for the New Towns which might be described as an urban renewal company which would continue to roll over the assets into the type of things that have been done so successfully. With the base that it already has in new town assets, it would have great borrowing potential. It could borrow on these assets.
The commission could also underwrite housing schemes to a greater degree. Some of the most successful operations have been developments of housing for sale that are underwritten by the local authority or the new town development corporations, if the houses cannot be sold. This is impossible under the present arrangements. Above all, it would be able to sell the assets at the time and price at which they should be sold. I remember asking my hon. Friend's predecessor this question in another debate. He assured me that there would be no move to try to sell now town assets against the best commercial advice available. Obviously, during a recession, this becomes difficult advice to give. Assets can always be sold provided the price is right. However, whether this is the right time to continue to sell large amounts of urban properly investments remains to be seen.
I welcome the increase in the borrowing power. My only regret is that the Bill is necessary. New towns in the future, and the sort of developments that are taking place in the constituency of my hon. Friend the Member for Liverpool, Wavertree (Mr. Steen) and in London can be financed much better by a properly organised and properly run national corporation established for this purpose.

Mr. John Evans: The hon. Member for Buckingham (Mr. Benyon) made a more sensible contribution to the debate than the hon. Member for Basildon (Mr. Proctor), who seemed to involve himself more with rhetoric than with the problems that exist in new towns and the facts of the case. However, I join in the welcome afforded to the Bill. I do not know whether hon. Members of the Social Democratic and Liberal Party alliance welcome the Bill because they obviously take no interest in it. The have not shown their faces during, the debate. They are obviously not interested in the problems that face the great new towns of our country.
When I picked up the Bill, I thought that it represented either a substantial U-turn in the Government's policy because it increases the borrowing limits of the new towns from £4 billion to a staggering £5 billion, or a monumental piece of incompetence in the Department of the


Environment. When I listened to the Minister's opening speech, I came to the conclusion that incompetence was far more involved in the Bill than a U-turn.
My hon. Friend the Member for Edmonton (Mr. Graham) referred to the fact that there had been a money Bill in June. I did some research on the subject of money Bills because the Minister rather quickly glossed over the fact that this is the third money Bill associated with new towns from the Government since they took office. I checked when last such a money Bill appeared before the House. That is the obvious action to take with a Bill that seeks to allow a major increase in borrowing limits. The answer is that the borrowing limits for the new towns were settled in the New Towns Act 1981 which was, in effect, nodded through the House. It had its Second Reading on October 23, and Committee, Report stage and Third Reading on October 29 and received Royal Assent on October 30. The Act was placed on the Statute Book and fixed the borrowing limits for the new towns as long as three months ago.
The Minister told the House that he expected that the present borrowing limits would run out in mid-March of this year. Surely, if the limits were fixed as late as October last year and are running out now, this exhibits incompetence by the Department of the Environment. If we are having to increase them by a staggering £1 billion, someone in the Department of the Environment cannot do his sums.
Another question that arises—it is interesting to consider the debate on the Local Government, Planning and Land (No. 2) Act—is the Government's determination to cut public sector investment in the new towns. It is self-evident, whatever the Government may have said during the debate and subsequently, that they have not succeeded. They are increasing it by a substantial amount. In his statement—it was not so much a statement as a series of planted questions which were taken at the end of Question Time—the Secretary of State, in answer to a question from the hon. Member for Peterborough (Dr. Mawhinney), said:
In his first question, if I understood him correctly, my hon. Friend was talking of the consequences of the reduction in public investment. It is my view that there will be a reduction in public investment."—[Official Report, 4 February 1981, Vol. 998, c. 292].
Of course, the evidence from the Bill is that, far from there being a reduction in public investment, there is, has been and will continue to be a substantial increase. I welcome that increase. That is why I welcome the Bill. But it is essential to point out to the House and particularly to the residents of new towns the rhetoric of Ministers. They say one thing on one occasion but when hard facts are presented to them they have to adopt different tactics.

Mr. Guy Barnett: Very much in character.

Mr. Evans: Yes. It is important that the House recognises precisely what is going on. In the rather heated debates on the 1980 Local Government, Planning and Land Bill, there were substantial rows over the parts dealing with the hiving off of new town assets. I am sure that my hon. Friend the Member for Greenwich (Mr. Barnett) will recall the discussion as to whether the Secretary of State for the Environment was acting legally

in demanding £120 million, I think, from the sale of new town assets. It does not seem that that amount has been paid back to the Treasury. The hon. Member for Basildon gave helpful answers on this; it is a pity the Minister could not supply the answers to me.

Mr. Proctor: At the beginning of his speech the hon. Member attacked me for using rhetoric. Now he is congratulating me on giving the facts. He cannot have it both ways.

Mr. Evans: In that case the rhetoric of the hon. Member was factual. I am thanking him for supplying the answers with which the Minister could not supply me at the beginning of the debate. On a Bill of this nature one would have assumed that the Minister who was moving the Second Reading would have had that sort of fact at his finger tips because it was bound to be a question that he would be asked. I do not know whether the Under-Secretary will have further evidence for us when he winds up the debate; I will listen with interest.
The point I wanted to make was that the Secretary of State for the Environment, throughout the heated rows we had on the Report stage of the Local Government, Planning and Land Bill, insisted that the purpose of the provisions was to reduce the amount of public expenditure in new towns and to ensure that they paid their full whack so that the public sector borrowing requirement might be reduced.
I suppose that I would be in order if I asked the Minister whether the additional £1 billion will have an impact on the public sector borrowing requirement. I assume I am right when I say that it will have a major impact. Where is the Secretary of State's rhetoric on that? I do not object. I want a substantial part of the increased expenditure to be incurred in my constituency because I have the honour to represent most of Warington new town; most of the designated area is within my constituency.
Without any shadow of doubt, Warrington is one of the most successful new towns. It has a magnificent record of attracting first-class industry and of providing splendid homes in a good environment for people from all over the North-West. I must say to the hon. Member for Basildon that the people who have lived in Warrington all their lives felt and still feel a sense of unfairness because they have been precluded from obtaining houses to rent. I am sure the hon. Member understands the frustration of those who are desperately anxious for decent homes when they see thousands of splendid homes being erected and are told that they cannot have them because they already live in Warrington and do not come from the designated sending area.
It was difficult for me to explain to many people that those were the rules by which the new towns were governed. I was not popular when I had to explain that. Now those people are deeply concerned because the newcomers who received rented houses are buying them at attractive prices.

Mr. Proctor: If I have understood the hon. Member correctly, he seems to be criticising what the hon. Member for Harlow (Mr. Newens) was taking credit for in an earlier speech.

Mr. Evans: I will deal with that in a moment. I am talking about the Government's policy of selling houses which were built to rent. That was the purpose of building


houses in new towns. I am trying to explain to the hon. Gentleman—he cannot visit his constituency often or he would get this complaint—is that people resent the fact that others who get preferential treatment are being allowed to buy their rented houses at substantial benefit, whereas those who have always lived in Warrington are told to purchase a house, presumably one of the one-bed starters about which the Minister boasted, at a price of £17, 500.
I will deal now with the point made by the hon. Member for Basildon. It is a smear to suggest that the Labour Party is opposed to people owning their homes. No doubt on reflection the hon. Member will wish to withdraw that remark. What the Labour Party has always believed in is building homes for people either to buy or to rent. There is a clear recognition in the Labour Party, which obviously does not apply in the Tory Party, that millions of poor people will never be able to afford to purchase houses but will require houses to rent. It is self-evident from the Government's legislation that they have washed their hands of the poorer people by not providing houses for them to rent.

Mr. Murphy: Does the hon. Gentleman not recognise that the Government have shown their determination to encourage the use of property for renting on shorthold tenure which unfortunately his side of the House has condemned?

Mr. Evans: We have been down that track many times. I am talking about public expenditure by the Government through local authorities and new towns to provide decent housing for people to rent. That is what the Government have utterly rejected.
It is right to pay a glowing tribute to the gentleman who has just finished his term as chairman of Warrington and Runcorn development corporation, Mr. Jim Mason, who did a splendid job over four years. He built up an enviable reputation not only in the Labour Party and with the trade union movement but with all political parties, with the local authority, with parish councils, with business and commerce and with almost everyone who came into contact with Warrington new town.
It was with great regret that the people heard that the Secretary of State did not propose to reappoint Mr. Mason. Many people in the new town have said that the sacking of Mr. Mason was a political decision of the Secretary of State. One Warrington borough councillor, Mr. Mike Hall, has commented on this; I quote from the Warrington Guardian of 22 January 1982:
Councillor Hall said he believed Mr. Mason, who was strongly connected with the Labour and Co-operative movement, was sacked for political reasons.
In the light of this Bill, the letter sent to me by the Under-Secretary on 16 November makes strange reading. He said:
We are, of course, aware of the high reputation that Warrington new town enjoys, and appreciate the hard work that James Mason has put into promoting it. The task of the Development Corporation is however changing; the main period of rapid development financed by the Corporation is now drawing to a close, "—
I will return to that later—
and the emphasis over the next few years will increasingly to towards preparing the two towns"—
Warrington and Runcorn—
for the day when the Development Corporation must withdraw, leaving private investment to continue the work the Corporation had started. We have therefore decided, that for the new phase in the towns' development, a fresh approach is required.

In the light of that letter and in the light of the speech of the Minister for Housing and Construction, it is difficult to see how any genuine reason could be advanced for not reappointing Mr. Mason as chairman. I do not quarrel with the Secretary of State's appointing his own nominee to the office, but those who are concerned with the well-being and the successful continuation of Warrington new town see it as a political appointment.
I have some sympathy for the new chairman, Mr. Donald Forster. I shall judge him on his actions over the months and years to come, but I have a great deal of sympathy for him, because he is coming in the wake of a successful and well-liked chairman and with the background that I have mentioned—that his was simply a political appointment and that Mr. Mason's major handicap was that he was a prominent member of the Labour party. I shall give the new chairman every support, and I shall give him every assistance on some of the issues that will arise in Warrington new town over the next few months. I am sure that he will follow Mr. Mason's path in many matters.
One of the major problems in Warrington new town is the completion of the transportation network. We have spent many millions of pounds on building one of the finest transportation systems to be found in any area. It includes a highly successful new railway station at Birchwood.
We are left with the terrible problem that at the very heart of Warrington we need a new high-level bridge over the Mersey. The problem has been going on for a long time. It is essential that the new bridge be completed. Lack of it makes nonsense of the tremendous expenditure on the expressway and the links between the M6 and the M62, which are beneficial to Warrington. We desperately need this new high-level link across the Mersey.
Many business men in the area have complained repeatedly that the problems that arise from time to time are costing them substantial sums. The Warrington Guardian of 22 January said:
The 33-year-old managing director of Ardex Fabrications, Mr. David Hughes, described the task of entering and leaving Warrington from the south side as 'a desperate battle'.
'The moment there is any additional stress caused by an accident or weather conditions, the situation becomes quite impossible. It is costing business and industry time and inconvenience—which is the same as money'.
I trust that out of the additional £1 billion now available to the new towns we can have some money to build the high-level link across the Mersey. One beneficial effect of that would be to open up the whole southern part of the designated area, where considerable sums of public money have already been spent on the infrastructure—roads, sewers and so on. It is waiting for that link.

Mr. Guy Barnett: My hon. Friend earlier made some interesting remarks about the retiring chairman of the new town development corporation, Mr. Mason. As I was in the Department of the Environment when the then Secretary of State appointed Mr. Mason, I should like to add to what my hon. Friend said. One of the prime reasons for Mr. Mason's appointment, as I recall, was his tremendous experience in local government. It seemed to us that he had an important contribution to make, and it is clear from what my hon. Friend has said that he has made such a contribution to Warrington's development. I very much hope that the new chairman, whom I do not


know, will be able to make a similar contribution. It is very important that the corporation can work in harmony with local authorities in the area.

Mr. Evans: I am extremely grateful to my hon. Friend for what he has said. As the Minister who had so much to do with the new towns, he had to work with Mr. Mason, and over some time got to know Mr. Mason's capabilities.
As I have said, I shall give the new chairman, who I do not think has a great deal of local government experience, my full support. I appeal to everyone else in the area to support him, because he has a major task, but it is important that Ministers should be aware of the hostility to, and feeling about, their decision not to reappoint Mr. Mason.
Another important decision that needs to be taken quickly is a decision to speed up development of the Westbrook site in my constituency. Almost every factory that is built in Warrington is quickly snapped up. If we could have the go-ahead to proceed with the Westbrook site—the sewers and roads and the rest of the infrastructure—we should be able to get on with building more houses. Under the Minister's edict, they would all be for sale, and unfortunately none would be available to rent. Nevertheless, we could get on with building them and the factories, which we could then let in order to start employing people. That would also give a shot in the arm to the construction industry in the area. I do not have to tell the Minister for Housing and Construction that the industry is on its knees, or on its back, depending on how one views the industry. We desperately need a decision about that site.
I want also to mention the tremendous success of the Birchwood science park. It has been so successful that the development corporation has now created an overspill site, known as the Birchwood science boulevard. In the past there was often criticism of the development corporation because so many of the newly attracted firms were in the distribution industry. Indeed, those who were hypercritical used to say that the corporation built nothing but warehouses. I do not know who first thought of the science park. It was certainly a brilliant concept, and it has been a tremendous success. We are there attracting the science-based industries of the future, offering jobs of excellent content, particularly to youngsters. Those jobs will be very important in the future.
It is with some trepidation that I turn to another matter, as the area concerned is not in my constituency but in the constituency of the right hon. and learned Member for Runcorn (Mr. Carlisle). I shall not go into the pros and cons of the arguments about the site, but I can say that there is a desperate need for a decision on the Pewterspear science park. I do not enter into the controversy over whether it is a good or a bad thing. The issue is on the Minister's desk. A decision is needed so that at least the new town development corporation and the people in the area know what the future holds for them.

Mr. Steen: A little while ago the hon. Gentleman criticised my hon. Friend the Member for Basildon (Mr. Proctor) for what the hon. Gentleman described as his factual rhetoric. The hon. Gentleman has now spoken for one minute longer—22 minutes—and his speech is sheer rhetoric. Will it become more factual?

Mr. Evans: If the hon. Gentleman had sat through the debate, as the rest of us have, instead of coming in halfway through, as he normally does, he would be in a better position to talk about fact and rhetoric. The length of my speech is a matter for the Chair rather than for a Conservative Back Bencher. The hon. Gentleman may not like what I am saying, but I have dealt with facts both in relation to the Bill and in relation to my constituency, which is affected by the Bill.
It is important for the Minister to understand that I am not entering into the controversy. I merely ask him to arrive at a conclusion about Petersfield. People in the area need to know what will happen. The proposal will have a major impact on the plans of the new town development corporation.
Warrington new town, as I said, has been a tremendous success. It is a wonderful comment on the necessary alliance between public and private expenditure. Warrington new town has always been prepared to cooperate in that way.
In the debate on the Local Government, Planning and Land Bill, I pointed out that for a considerable time Warrington new town had been using the roll-over principle in the sale of its assets. Warrington was quite prepared to enter into agreements with private industry to sell, build and lease. That is the sensible approach. It is not the Government's approach, with its stress on ideology rather than common sense. As my hon. Friend the Member for Dunbartonshire, East (Mr. Hogg) pointed out, if we are to sell assets we must sell them in a more helpful market. We must not sell them in the depressed market created by the Government.
I only hope that in a few months we shall have an even greater recognition by the Government of the importance of public expenditure, and that they will present another money Bill further to increase the borrowing limits of the new towns.

Mr. Anthony Steen: I am sure that the hon. Member for Newton (Mr. Evans) will take my comments in the spirit intended. I take support from his comments. I make no party political point, but merely comment that there are no Social Democrats or Liberals in the Chamber. I entirely support his drawing attention to that fact. [HON. MEMBERS: "Where are they?"] They are not here anyway.
This is an important Bill, which should be debated. We are increasing the amount that the House gives new towns the power to borrow. It is a sizeable sum. It is so large that it is hard to grasp what the sum is. Furthermore, we shall not be told, by the sound of it, exactly what the money will be used for. No shopping list has been drawn up.
Although I was out of the Chamber for a while, I heard most of the speeches, which were of a high standard and interesting. The Minister did not give us a shopping list. He merely said that corporations will decide how they want to spend the money. That is a blank cheque to increase their borrowing power. Presumably they will use the money to improve the infrastructure and finish off the work that they want to do. That means they will be more attractive and will be able to continue development and expansion programmes.
That opportunity is very much at odds with what is happening in the major industrial urban areas. Large industrial cities do not have such powers. While their


borrowing of public money is being strangled, the new towns are given opportunities to increase their borrowing. This will put large industrial cities such as Liverpool at a continued disadvantage.
I support what the hon. Member for Newton said about Warrington being a successful new town, but its success has been at the cost of the decline of Liverpool. A great number of people who lived in Liverpool have moved to Warrington.
My first concern is that the Bill gives the new towns opportunities to make themselves more attractive—to buy new cosmetics—while the old cities continue to look plain and dowdy. What will the money be used for? It would be helpful if the Minister explained a little more fully exactly what the increased borrowing powers will give to the new towns.
I shall explain my principal concern. In the 1960s local authorities were encouraged by the Government to borrow increasing amounts of money to extend and develop their most ambitious redevelopment plans. In 1965 local authorities in England borrowed £455 million, in 1966, £546 million, in 1967, £398 million, in 1968, £589 million and in 1969, £556 million. We know what happened. The massive demolition programmes in the principal industrial cities resulted in an enormous loss of population. Glasgow lost 21 per cent. of its population, Liverpool, 22 per cent., Manchester, 18 per cent. and inner London, 16 per cent. This was a direct result of the increased borrowing by the local authorities similar to that which the Bill is now giving to the new towns.
The money was used for mammoth demolition programmes. Between 1966 and 1976, Liverpool demolished 21, 489 buildings, Birmingham, 19, 715 dwellings, Glasgow, 53, 396 and so on. It was the local authorities' borrowing of public money that allowed them to demolish those houses and that resulted in the people moving out.
This is not something of the past. In 1967 at the Habitat conference in Vancouver the Secretary of State for the Environment said that Britain had pensioned off the bulldozer. He may now regret having said that. Between 1975 and 1980 Liverpool demolished 6, 446 dwellings, Glasgow, 17, 497 and Sheffield, 11, 130. The pattern is continuing.
As local authorities borrow more public money, houses are demolished. New towns in the North-West and the Midlands, such as Warrington, benefit from the outflow of population, so they need more public money to pay for the infrastructure to provide for these people. It would be wiser for the Government to realise that they have got these ailing industrial areas—for example, Liverpool, with about 2, 400 empty units of public housing. They are just not being used. They need to be maintained and improved. That would he better than demolishing older housing and pushing people out to the new towns. More public money will then need to be borrowed. The large industrial cities need power for increased borrowing to improve the declining housing stock, which will be demolished in due course.
A curious factor in a city such as Liverpool is that the bulldozer has demolished the bulk of the private housing in the inner city. The bulldozer is still hungry. It is starting to demolish public housing. In my constituency we are to dispossess 2, 000 people living in a spine block on a council estate that won an architectural award in 1972. It is barely nine years old, yet it is being demolished. A

similar thing happened in St. Louis in the United States, where they pulled down eight or nine high-rise blocks because people would not live in them.
That is just what is happening in my constituency on a public housing estate. Blocks barely a decade old are being pulled down. That is in Belle Vale. In the neighbouring constituency of Garston about 2, 000 units are being pulled down. About 6, 000 people will be dispossessed. The bulldozer has already started to smash vast council estates built only seven or eight years ago.
What will happen to the people who live there? We should give priority not to extending the new towns, increasing the infrastructure and improving what is there, but to using public money to revitalise inner cities and revitalise, rejuvenate and rehabilitate the existing declining housing stock. Public authorities in industrial cities should be allowed to borrow money for that purpose.
The Minister would not dream of bringing a Bill to the House that he did not believe was necessary and of great importance. I do not want the new towns to compete with the old, but there is a connection between them. We should revitalise what we have and not continue to extend new towns, successful though they are.
Let me suggest one or two ways to improve the Bill. It is important to encourage private enterprise, but public funds should be used only as starter finance to persuade private enterprise to come into schemes as partners and encourage it by the use of public money. That was the original concept of the new towns—the public sector would do the essential work and then private enterprise would come in. That has not happened as much as we hoped.
On the horizon is a similar problem with the urban development corporations in London and Liverpool. Their purpose is to clear the sites, put in the infrastructure and encourage private enterprise to set up industries on the waterfront. We must be careful that we are not asked in a year or two to increase the UDCs' borrowing power because they wish to build the factories that private enterprise should build.
I am not sure that the proposals in the Bill could not be carried out in a more private enterprise way. The corporations should be encouraged to borrow public money, but on terms. Will the Minister consider a pound for a pound? For every pound borrowed from the public purse the corporation must be satisfied that it can attract one pound from private enterprise.
If there were problems in getting the money, could we not encourage private investment in a more attractive way? For example, could we not persuade the banks and insurance companies to invest in the new and old towns by giving them tax exempt bonds? They could borrow money tax exempt, without having to pay interest, 2 per cent. or 3 per cent. below the bank rate. The banks could invest in, say, building a road in a new town and would be paid interest 2 or 3 per cent. below the bank rate by the corporation. Such a proposal would increase the rates revenue for the area by attracting new firms, and the rate income could be used to pay the interest on the loan.
The Minister does not appear to rule out such a proposition. He appears to suggest that the borrowing need not be confined to public funds but could include private funds, although not English capital. Why cannot we not lend money from the banks and insurance companies? The explanatory memorandum states that the new town development corporations


can borrow temporarily, from any person, sums required to perform their functions.
in currency other than sterling".
I do not know whether the Minister feels that sterling is not a good currency to borrow in, but it would be useful to know why sterling is excluded. There must be a good reason.
These are large sums. I understand why the Opposition are in favour of the proposal. It involves a lot more money from public funds. I support the Bill, but with reservations, unless we know that the large old towns such as Liverpool, Manchester and Birmingham will have the same opportunity to improve their infrastructure. Had the Bill a more private enterprise flavour I should be happier. It is a trend in which we on the Conservative Benches are interested. I should like to see a tax exempt revenue bond or municipal bond similar to those in the United States. Private enterprise should invest in the schemes. It should not be left entirely to the public purse. Subject to those reservations, I support the Bill, but I hope that the Minister can satisfy me that the Government understand the full force of the Bill.

Mr. William Hamilton: It is interesting to hear the churlish welcome for the Bill from the Conservative Benches. It is basically an ideological conflict. Tories believe fundamentally that public enterprise and spending is, by definition, bad and should be minimised, if not eliminated, and that private enterprise, investment and spending, conversely, is always good. They have said that not only today but on the Second Reading of the original Bill—way back in 1946.
I take a firm view of the matter, based on experience from the day when the new towns were created. Two of the most exciting social experiments in the world since the war have been the National Health Service and the new towns, which are still the envy of the world.
The new town of Glenrothes is in my constituency. I have watched it grow from green fields. It now has a population of 40, 000 or more. I have watched every brick laid and every factory and house built through conscious and deliberate planning and Government and local authority intervention. The houses and factories have largely replaced the old colliery rows and the mines themselves. Glenrothes new town is now a jewel in a Scotland that is being torn to pieces by the Government.
I was interested in the comments of my hon. Friend the Member for Dunbartonshire, East (Mr. Hogg) on Cumbernauld and of my hon. Friend the Member for Central Ayrshire (Mr. Lambie) on Irvine. They have stories to tell of devastation, but that is not my experience with Glenrothes, which is a considerable success. The town has largely ridden out the worst effects of the recession and Tory policies since 1979. Glenrothes is visited by people from all over the world. No other social experiment compares with our new towns.
When I see the new towns I look back with some amusement to the New Towns Bill debate on 8 May 1946. I shall not weary the House too much with the extravagant language used by quite prominent Conservative Members. A former Speaker of the House, Mr. W. S. Morrison, then the Member for Cirencester and Tewkesbury and the

official spokesman for the Tory Party, accused Mr. Silkin—the father of my right hon. Friend the Member for Deptford (Mr. Silkin) and my right hon. and learned Friend the Member for Dulwich (Mr. Silkin)—who introduced the Bill, of trying to build Utopia and of creating synthetic communities. That wild man, Viscount Hinchinbrooke, who was never temperate in his language said:
The Bill… is frankly totalitarian in form".
He went on to say that this kind of experiment
has never been attempted before in the whole history of this country".
He said that it had not been tried anywhere else except in Russia and no one knew what profanities were being perpetrated in the Urals. The implication was that we were copying a vicious, nasty, totalitarian experiment. Viscount Hinchinbrooke, referring to the clauses on Scotland, said:
Alas, poor Scotland. Another deadly blow; another mighty Empire overthrown."—[Official Report, 8 May 1947; Vol. 422, c. 1153-55.]
I remember him as quite a card, but nobody in the House took him very seriously.
I can contrast that prediction with my experience in Glenrothes. In its early days, Lady Balfour and the agricultural communities were antagonistic to the whole concept of new towns. Lady Balfour, who lived in a magnificent country house with hundreds of acres round it, said that it was awful for a corporation to build houses for ordinary people and thereby deprive the country of good agricultural land. She was surrounded by hundreds of acres on her private estate. I told her that when we built high rise flats in the town—if we did—we would save the agricultural land by putting her at the top and taking over her house and estates to grow barley and oats and anything else she cared for. She was not very impressed by that suggestion. I told her that in Glenrothes new town we would produce not oats or barley, but damn good citizens, and that is what we are doing.
For example, the education system, from the nursery schools through the primary and secondary schools to the technical colleges and the five or six universities almost within spitting distance, has no equal in the world. What we have is a direct consequence of public enterprise, public interest, and public intervention from the beginning.

Mr. Steen: The hon. Gentleman is making the important point that these were green field sites and that houses were built on virgin land. How does he view the people who were left behind in the large industrial cities of Glasgow, Newcastle and Liverpool? Is he suggesting that all the people in these socially deprived and unhappy areas should be moved out into the new towns and the inner cities grassed over, or does he agree that the old cities should have the same opportunities as the new towns?

Mr. Hamilton: The old cities were built by people such as the hon. Gentleman and others whom he supports. They were built by private enterprise for a system that exploited the needs of people. After the last war, the Socialist Government of 1945 decided that they would house and educate the people in a better way than they had ever been educated before. As a result, people came to Glenrothes, East Kilbride and elsewhere out of Glasgow.
There were problems remaining. It would be silly to pretend that all the problems were solved by creating new towns, but they made, and are still making, a considerable


contribution to the solution of the social, economic and industrial problems with which this country was faced at the end of the last war. We are not yet out of the wood.
There is a great deal of jealousy. In Fife there is a love-hate relationship between Kirkcaldy, seven miles away from Glenrothes, and Glenrothes because they and the other languid areas in Fife believe that Glenrothes is getting far more than its fair share of the cash that the Government are providing for the new towns. Kirkcaldy district council and Fife regional council are having to struggle to get anything from the Government. They cannot understand why the Government are giving £1 billion to the new towns while they are having to scrimp and save and get permission to build one or two houses—and no schools. They are feeling the pinch, and I can imagine their reaction to the Bill.
Another problem in Glenrothes and, no doubt, to a lesser extent, in other new towns is special development area status. Levenmouth, which lies cheek and jowl with Glenrothes, has an unemployment rate far in excess of that in Glenrothes, but the new industry goes to Glenrothes. This problem has to be dealt and lived with. I hope that the Government will take it on board and give back to Levenmouth its special development area status. That might satisfy it and help its relationship with Glenrothes.
I do not know how Scotland fits into the Bill. There is a global loan figure of £1, 000 million. I do not know whether the Minister will answer the specific Scottish points. For example, what proportion of that money is going to Scottish new towns? We do not know. We have a global sum. The Scottish Minister looks reasonably pretty, but we do not want him just sitting on his bottom. He ought to be playing his part in the debate. We ought to have an official Scottish spokesman to spell out what the Bill means in a Scottish context.
My hon. Friends who represent Scottish constituencies have made it clear that Scottish new towns, particularly in the west, are in a disastrous state. In Glenrothes it is a different story. The Minister should have insisted. He should have gone to his mistress—I had better not speak in that context in view of what happened to the Scottish Solicitor-General. The Minister should have gone to the lady at the top and said that he wanted to take part in the debate, because active Scottish Members would be taking part and asking Scottish questions which an English Minister was not competent to answer.
I want to pay tribute to Brigadier Doyle, who died recently. I think he was at the Rothes colliery when it collapsed. The new town concept was built around that colliery. When the colliery collapsed, for geological and other reasons, many people thought that it meant the closure, the final coup de grace, for Glenrothes. However, Brigadier Doyle and others regarded that as a challenge. They went out and brought in industry—electronics industries from the United States, and light engineering industries. Now we have more than 150 new firms, most of them small.
I believe that small is beautiful. Industrial relations in Glenrothes new town are probably the best in the whole of the United Kingdom, because, by and large, it has small firms with a high technological content. It should be an example of the kind of progress that can be made in regional policy. New towns are an important element in the Government's regional policies and should be pursued more energetically than happens at present. If we combine industrial diversification, new technologically advanced

industries, a superlative education system, modern housing, and an environment in which almost everyone has his own house and garden, we shall provide conditions in which ordinary working people can thrive and be happy.
That does not mean that there are no problems. There is a great deal of hidden poverty in Glenrothes as a direct consequence of what the Government are doing in social security and in other ways. Glenrothes has a problem with the regional road. It is the only new town in Scotland, if not in Britain, that does not have direct access to the motorway system. I hope that my hon. Friend the Member for Central Ayrshire (Mr. Lambie) will take part in the debate and comment on the shortcomings in Irvine. The problems there are far greater than in Glenrothes.
Labour Members are very proud of the new town concept. For that reason, we are glad that the Government have introduced the Bill. I do not care whether, as my hon. Friend the Member for Newton (Mr. Evans) said, it is a U-turn or any other kind of turn. We shall approve as long as the Government persist in giving good public money to good public causes. In that respect, we welcome the Bill.

Mr. Donald Dewar: There has been a fairly strong Scottish input in this debate.
I start by welcoming back my hon. Friend the Member for Kirkcaldy (Mr. Gourlay), who has been absent for many a long month as a result of a serious accident. I hope that he will soon be fit enough to be here regularly and give us the benefit of his views. He was just in time, I think, to hear the remarks of my hon. Friend the Member for Fife, Central (Mr. Hamilton) who was passing judgment on Kirkcaldy. I hope that my hon. Friend agreed with what he said.
As I said, there has been a strong Scottish theme in the debate, and the only thing that is missing is a Scottish Minister. I do not complain about the absence of the Under-Secretary of State for Scotland, the hon. Member for Edinburgh, North (Mr. Fletcher), because he told me that he could not be here tonight. I congratulate the Under-Secretary of State for Scotland, the hon. Member for Renfrewshire, East (Mr. Stewart), who stuck doggedly to his task, and heard much of the debate. So when I complain about the absence of a Scottish Minister, I mean a Scottish Minister at the Dispatch Box. I am sure that the hon. Member for Renfrewshire, East is not here as decoration. No doubt he will supply the wants, if there is any want, in the no doubt well-briefed mind of the Under-Secretary of State for the Environment, the hon. Member for Ealing, Acton (Sir G. Young), who I am sure will be able to deal with some of the specific Scottish points that I intend to raise.
Let us return, first, to the simple question that was asked by my hon. Friend the Member for Fife, Central. We do not want a breakdown for individual new towns; that would be preposterous. However, there is clearly a separate Scottish system. We have five new towns in Scotland. Perhaps I should know, and I hope that I shall be told tonight, how the allocation of total new town finance is broken down between Scotland and England. I do not know whether it is done in that way, whether there is an apportionment in these simple terms, or whether there is an updated Goschen formula. However, I am sure that the Minister will tell us.
The common ground among those who have spoken tonight—although the hon. Member for Liverpool, 


Wavertree (Mr. Steen) appeared briefly, he equally promptly disappeared after he spoke—was reservations about the Bill. Most of us welcome it and regard it as an unexceptionable measure. We accept that the borrowing limits for new towns have to be raised, as for many other public authorities. There is nothing controversial in that. When I spoke recently to people in new towns, either living in new towns or living and working in the administration of new towns, I found that they were more worried about the Government's general economic policy and about the economic blizzard that is now blowing in Scotland than about the nuts and bolts of this legislation. It is sad that when 347, 000 people are out of work in Scotland, however successful an individual new town corporation may be, there is no way in which it can insulate its people from such a disaster.
The reports on the five Scottish new towns are conveniently packaged for consultation. The one for the year to 31 March 81 is the most instantly available. I accept that it deals with the financial year 1980–81, but even at that stage it can be seen that Conservative economic policy, despite the bland optimism of Conservative Members, particularly the hon. Member for Basildon (Mr. Proctor), has been biting severely in the Scottish new towns. Let us take the East Kilbride development corporation about which the combined reports say, on page 49:
As a result of the government moratorium on new house construction, the Corporation found itself for the first time in the unfortunate position of having no new housing starts under consideration at the end of the year. This inability to provide housing to meet locally generated needs, both from incoming industry and from second generation families, causes the Corporation considerable concern.
That concern has not been removed by anything that has happened to housing in East Kilbride since that report was written.
On Cumbernauld, the report for the year 1980–81 laments the fact that it has been restricted to only 97 completions in the course of the year. Although my hon. Friend the Member for Fife, Central said that Glenrothes was perhaps less immediately hit than those on the West coast, I remind him that the Glenrothes development corporation report says on page 103:
One major disappointment during the year has been the virtual cessation of the public sector house building programme. At the time of writing it appears that there will be no significant starts during the year 1981–82. The Corporation fears that a long lasting prohibition on house building will eventually put at risk its ability to sustain its efforts to make the town an industrial and commercial growth point.
That is the story in three of the five new towns in Scotland, but the story is the same in them all. Opportunities are being cruelly limited there, and their new build programme has come to almost a complete halt. My hon. Friend the Member for Dunbartonshire, East (Mr. Hogg) fairly said that just at the time when the Government are choking off investment in the essential housing stock of new towns, the Secretary of State for Scotland comes along and forces ever-increasing rent bills on tenants.
It is announced that the rents will go up in the Scottish new towns, by, I think, £2·10p a week on average. According to my calculations, that is over 20 per cent.—and it is not just this year; it was 20 per cent., or close on 20 per cent., the year before, when the rise was

£1·90p. Those decisions are taken arbitrarily and entirely by the Minister. It is extraordinary that Ministers—I accept that the Minister who opened the debate is not necessarily, except in constitutional theory, responsible for what the Secretary of State for Scotland does—smoothly suggest that in some cases, the smaller private housing units, it is cheaper to buy than to rent. I do not deny that but it underlines the illusion of the rents policy pursued in new towns in Scotland. No doubt the same applies to England, but I cannot speak with authority about that.
The hon. Member for Basildon made great play of his dislike of subsidies. However, in the job lot sales policy being pursued in the public sector of housing there is an enormous element of subsidy, both in terms of discount and the support that taxpayers give to mortgages. I do not object to the encouragement of home ownership, but we have an unfortunate, divisive and inefficient way of supporting home ownership, which makes the management of housing stock by new towns and district councils difficult to maintain.
In the past few years, the picture of investment in the new towns in Scotland has been depressing. In April 1981, Hansard gave figures covering the years 1977-78 and 1981–82 for the provision of gross capital expenditure on housing by new towns. In that period the figures more than halved and they are still falling in real terms. Housing is a story of disaster. I do not wish to labour the point, but the same sad story can be told about employment. It is true that East Kilbride development corporation is a little more cheerful than before, largely because it is struggling to recover and has not faced last year's disaster of the closure of BSR and McDonald Electronics.
In Cumbernauld there was a net loss of 723 jobs in 1980–81. In the same year, Glenrothes faced a net loss of 1, 200 jobs. That type of economic depression has become worse. My hon. Friend the Member for Central Ayrshire (Mr. Lambie) was right to draw attention to the horrifying fact that in a new town, Irvine—which is supposed to be a growth point and a leader in the recovery under a Conservative Government—unemployment is running at 24·7 per cent. In the march back to economic prosperity, male unemployment is considerably higher than that. That underlines the fact that the Government's impact on new towns, as on everything else in Scotland, has come to a sad pass.
New towns in Scotland are at a different stage from those south of the border. The Minister referred to new towns drawing to a close. However, the discussion document recently launched in Scotland by the Secretary of State makes it clear that no new towns in Scotland will close before the end of the 1980s. The target for the size of the population in the five new towns is 372, 000. At present, the figure is well short of 250, 000. Therefore, we have a long way to go before we can say that the new town development corporations have met their targets and completed their tasks.
In paragraph 16 of the Secretary of State's consultative document, he states that development corporations are
to continue in the meantime to sell their housing in accordance with the existing legislation and to dispose of other assets as at present in order to finance further development.
In the latest East Kilbride development corporation report there is a reference to that. In paragraph 32 on page 57, it states:


Negotiations continued for the disposal of a number of the Corporation's commercial assets in accordance with the requirements of the Secretary of State for Scotland.
Those rather laconic words probably cover up a good deal of disagreement among board members in that new town and in other new towns. I do not know what commercial assets have been alienated and sold in Scotland and I do not know what the targets are. It would be useful if the Minister put us in the picture and told us about the requirements in accordance with which East Kilbride is, probably reluctantly, acting.
I accept that the document is preliminary and consultative, and that a timetable has not yet been laid down. However, I understand that it is proposed to begin winding up the new towns when the target population is within 5, 000 of the total. Even in East Kilbride—the most advanced new town in terms of meeting its population quotas—that will not be for a good number of years. I do not dissent from the view that at some point there will have to be a phased takeover and that the democratic structure of local government will become responsible for the housing cares of new towns. No doubt the Scottish Development Agency will hold some discussions and negotiations about the industrial assets, factories and sites. To wait until we reach that point, which is near the end of the road, may be a mistake.
Having listened to hon. Members' comments on the experience in England, the great discontent about the section 10 negotiations and the bickering over terms, I imagine that the run-in may be difficult and that the process may have to take place over a longer time-scale than planned, if it is to be completed in an orderly manner, without the frustrations and difficulties that attended the operation in England. I accept that the Government are consulting, but I hope that they will consider more flexible proposals than those set out in the paper.
I welcome the Bill. I accept that there are always jealousies and tensions—constructive or otherwise—between new towns and the older urban areas. I know some of the new towns in Scotland very well. I come from Glasgow and no doubt reservations are freely expressed there. I understand them. However, everyone in Scotland admires the skill, perseverance and energy with which the new towns have pursued their aims in difficult circumstances—never more difficult than now—and tried to build a future. I look forward to the day when they will be able to bow out, but that must be a matter of negotiation, arrangement and, above all, co-operation. The timetable must bear that in mind.
Important as those long-term objectives are and important as it is to get them right and to make an orderly and amicable transfer, the economy in Scotland still shows signs of genuine, long-standing and deep-rooted distress. The people of Glenrothes, Livingston, East Kilbride, Cumbernauld and Irvine are worried by the unemployment figures, the rents forced on them and the lack of investment in the infrastructure. That investment is needed to provide the reasonable standard of living that we expect new towns to offer. Until the Government are prepared to accept that their record in the past two or three years has been lamentable and destructive and until they are prepared to take steps to reverse that downward trend, anxiety and frustration will continue in the new towns, just as they continue to find expression in all the other communities in Scotland and in the United Kingdom as a whole.

The Under-Secretary of State for the Environment (Sir George Young): The debate has been useful and constructive and I shall try to deal with the many points raised during its course.
I welcome the fact that the hon. Member for Edmonton (Mr. Graham) made it clear that the Opposition would not oppose the Bill's Second Reading. He asked why the borrowing limit had run out earlier than originally envisaged. There are basically two reasons. First, the assumption about the interest rate that was built into the earlier judgment turned out to have been over-optimistic, because interest rates have been higher than expected in the past two years. Secondly, the rate of disposals has taken a little longer to build up than predicted. For those reasons, we are reluctant to be pinned down and to give the prediction that the hon. Gentleman requested about when the current borrowing limits will run out. I cannot add to what has been said, but we expect that they will last for about two years.
The hon. Member for Edmonton went on to allege that there is a shortage of new town accommodation. He tried to attribute that to our policies for the sale of local authority and development corporation property. The switch to shared ownership and private site provision has not adversely affected the ability of the new towns to meet, needs especially those of the incoming populations. At the end of September 1981 there were about 6, 800 rented dwellings vacant in the English new towns that have kept their housing, which is about 6 per cent. of the total stock. Some of those dwellings were unoccupied for valid reasons, such as the need for repairs. However, there are many vacant dwellings immediately available for rent in nearly all the new towns. For example, there are over 800 at Telford, another 800 at Peterborough and over 480 at Northampton. One cannot sustain the case that the emphasis towards home ownership has resulted in a shortage of houses for rent in the new towns.
The hon. Member also produced the red herring that we come across time and time again—that 12 council houses must be sold to finance the building of one new house. However, that assumes that the 12 council houses that have been sold would otherwise have become available for renting. That is not the case. It also overlooks the fact that, by selling, one can sustain a higher public investment housing programme than would otherwise have been the case.
The hon. Member for Edmonton and one or two of his hon. Friends indulged in some hypocrisy by suddenly championing the cause of the small business man arid complaining that we are denying him the opportunity to buy his freehold. The fact is that that opportunity did not exist until the Government came to office. We have extended that freedom to many business men who until now have rented their sites. For the reasons given by my hon. Friend it is not practical to extend that freedom to everyone. If one indulges in widespread pepper-potting, that has an adverse effect upon the value of the development. However, I do not see how Opposition Members can criticise our policy on enfranchising the small business man.
A number of hon. Members asked me about asset disposals. As my hon. Friend said, by the end of this financial year asset disposals will have realised about £300 million since we came to office. There is no question but


that without that sum we could not have maintained new town development activity at the level achieved during the past three years. That is an English figure.
Perhaps I should make it clear that the statistics that I have given apply to England and Wales. The Scottish position is relevant because the overall borrowing comes within the capacity of the Bill. However, the allocation of money to the new towns in Scotland has nothing to do with Department of the Environment Ministers. It is a matter for the Secretary of State for Scotland, who deals with it as part of his provision.

Mr. Graham: I am grateful for the information that the Minister has given on that point. However, as to the sale of assets, will he tell us what criteria the Government use periodically to decide how much they will ask the new towns to dispose of? We know that they would rather dispose of nothing. Will the Minister also answer the point made by my hon. Friend the Member for Newton (Mr. Evans) as to how much of the assets that are realised are then rolled over, ploughed back and used to finance either other new towns or urban development corporations?

Sir George Young: We are committed to the continuing disposal of new town industrial and commercial assets in order to reduce the public sector borrowing requirement and also to reduce the public sector's role as a large-scale landlord. Sales are proceeding as fast as possible, although not as fast as originally anticipated due largely to the effect of the recession on sitting tenant sales. Disposals are proposed only where the development corporation is satisfied that it is getting the best consideration reasonably obtainable. That includes, in appropriate cases, a fair proportion of marriage value. Sitting tenants are given as good an opportunity to buy the premises that they occupy as is consistent with securing for the taxpayers a proper return on their investment. The figure that the Government assume for disposals is arrived at after consultations with the development corporations and their professional advisers.
Our policy is that new towns should sell their industrial and commercial assets so that they can become more like other towns. It will also enable the winding-up of the Commission for the New Towns to take place, for which legislation is needed.

Mr. Dewar: I do not know English terminology, so perhaps the Minister will tell me what "marriage value" means. We do not have that in Scotland and it is foreign to me. Secondly, if we are selling off assets to help the PSBR, is there any bottom to that? One could sell off 100 per cent., which might be desirable for the PSBR but which would be thoroughly undesirable for the new towns. What is the bottom point at which the wild chase for quick returns will stop? Thirdly, perhaps the Minister can be briefed by the Under-Secretary of State for Scotland, who is responsible in Scotland. Perhaps he can get the Scottish figures from the Under-Secretary now or arrange for him to intervene and give them to the House.

Sir George Young: The marriage value is the extra value that would accrue to the tenant if he is entitled to buy the property. It is the difference between the value of the site with a sitting tenant and the value of the site with vacant possession. It is a matter for negotiation, when one

sells a site with a sitting tenant, to whom the marriage value accrues—to the sitting tenant or to the landlord. The interests of the taxpayers must be preserved and a proportion of the marriage value must come back to the development corporation.
I shall deal in a moment with the community-related assets, which is what is left if one disposes of the revenue-earning assets, as we are at the moment.
As to the last question, I am sure that my hon. Friend the Under-Secretary of State for Scotland made a note of it and will deal with it as best he can.

Mr. Murphy: May I impress upon my hon. Friend the concern that is still being expressed by many sitting tenants—who wish to purchase commercial or industrial assets—about whether they are given sufficient advantages in the purchase procedure?

Sir George Young: The best answer to that is that if my hon. Friend will draw to my attention any problems that affect his constituents I shall do what I can to resolve them.
I was asked by the hon. Member for Harlow (Mr. Newens) about the position of small tenants. There is no case for giving tenants of commercial and industrial property especially favourable terms for buying their premises. It is important for the taxpayer to get a fair share of the marriage value through the new town corporations. Tenants have an opportunity to buy at a fair price, something that was denied to them by the Labour Administration.
A number of hon. Members asked me about housing transfers and section 10. We are making progress towards a settlement of authorities' claims for grant under section 51 of the New Towns Act 1977, formerly section 10 of the New Towns (Amdt) Act 1976, and towards the cost of remedial work on former new town houses. We have asked the National Building Agency to advise us on those claims. The work is due to be completed by the end of May by a company established by former staff of the agency. We aim to take a final decision on the extent of assistance to be made available as soon as possible after we have received the report and held any further discussions with the authorities and with the Association of District Councils. If the ADC had not rejected the offer that we made in January 1980, the authorities could have been receiving some grant during the current year. I hope that it will be possible to reach an equitable settlement. In the meantime, we have made it clear to authorities that they can carry out any urgent work without in any way prejudicing their claims.

Mr. Graham: Can the Minister be categorical and say that, once the NBA report has been received, before the Government finally make up their minds about their action, they will provide the new towns, through the ADC or otherwise, with an opportunity to discuss or challenge the NBA report?
In a new town that I know the figure that has been calculated by the district council to put right the inherent design defects is about £7 million. I assume that it is possible that the NBA may say to the Minister that the figure should be £4 million. I am not saying that the Minister should accept the figure of £7 million rather than £4 million, but the district councils should have at least an opportunity to challenge or question the report. At the end of the day, the Minister and his colleagues will make up


their minds, but there is a great anxiety that the Minister may produce a fait accompli. May the district councils understand that no action will be taken until the people who must spend the money and suffer the consequences have an opportunity to challenge the figures?

Sir George Young: It is indeed our intention that the report commissioned by the NBA should be available to the district councils and the ADC and that there should then be a period of consultation so that we can come to an amicable settlement. I hope that that assurance is acceptable to the hon. Gentleman.
A number of hon. Members raised the question of grant-related expenditure assessments for the authorities in which the new towns find themselves. I do not think that any hon. Member thinks that the GREA gives his constituency a fair deal, but most, although not all, district councils with new towns in their areas are spending at levels well above the GRE assessments that underpin the block grant system. The assessments for those authorities are made on the same basis as for any other authority. To the extent to which they have chosen to provide a higher level of service than the average, it is right that they should be expected to make a larger contribution from their own resources than authorities that have chosen to provide lower levels of service and to levy lower rates. That is what the block grant system achieves using the GRE's as a measure of what it costs each authority to provide a typical level of service.
I concede that the GRE is a new system and will not be perfect in its first year of operation. There may be factors that affect what authorities need to spend but which are not incorporated in the formula, and others which have not been given enough weight. One change that the Government have made to the GREs for next year will assist a number of new town authorities. We have dropped the assumption incorporated in the 1981–82 GREs that authorities with the potential to make a surplus on the HRA would transfer it to the rate fund. That will certainly reduce the disparity between expenditure by new town authorities and their grant-related expenditures.
The Government are always ready to consider further proposals for improvement in the GREs so long as they are based on principles that can be applied to all local authorities, which is a legal requirement of the GRE method.
My hon. Friend the Member for Welwyn and Hatfield (Mr. Murphy) put Government policy in the context of our strategy for inner cities and for harnessing the resources of the private sector in housing, commerce and industry. I was grateful for his strong support for the Government's proposals to put right the imbalance that has arisen in the ownership of assets in new towns. He pressed me and my hon. Friend about the Commission for the New Towns. In September 1979 my right hon. Friend the Secretary of State announced that the commission would be retained for the present, but that it would be wound up in due course. I cannot say when that will be, as legislation is required, but we have given the commission an assurance that it will not be wound up before the end of 1984. In the meantime, however, we have urged it to dispose of its industrial and commercial assets to the private sector and it has played a major part in the disposal of assets programme. The Government have also asked the commission to open negotiations with those local authorities that have commission towns in their area about the transfer of its

remaining responsibilities that cannot reasonably be included with the sale of properties to the private sector. Government policy is that the commission should withdraw from those towns in which it has responsibilities as soon as it is practicable for it to do so.
A couple of weeks ago I visited Harlow and had talks with the leader of the council and the chief executive about section 10 and other matters. It is important to remember that work on urgent repairs can take place. One must send a message to Harlow that properties transferred to it by the development corporation were transferred at outstanding loan value and that if it made slightly quicker progress to sell properties to tenants who wished to buy them it would have more resources to tackle the serious housing problems that it faces.

Mr. Graham: In the absence of my hon. Friend the Member for Harlow (Mr. Newens), I must point out that he was concerned at the terms on which the non-industrial and non-housing assets would be transferred. Did I understand the Minister to say that there would be sympathetic discussions between the Government and the authority concerned? If it is proposed that only the unprofitable communally used assets are to be transferred to the authority and the profitable ones are to be given to privateers, the situation will be extremely difficult. Can the Minister give an assurance that sympathetic consideration will be given to the terms on which district councils accept that kind of asset?

Sir George Young: That is really a matter for negotiation between the district council and the Commission for the New Towns. Some community-related assets such as club premises are leased by development corporations to private tenants and others, such as playing fields, are leased to parish councils, and we have asked the development corporations to give such tenants the opportunity of buying the freehold. Other assets, such as parks, are the type of community asset normally provided by district councils. We believe that assets of that kind should pass to the local authorities, and we are encouraging the new towns to negotiate the terms of transfer with their own local authorities. We shall be considering with them the kind of terms that provide a fair balance between the interests of the taxpayer and those of the ratepayer.
A number of hon. Members asked about the totality of cash flowing either from the Government to the new towns or in the reverse direction. The simplest way to put it is to explain briefly what has happened in the three financial years from 1979–80 to 1981–82. Gross capital expenditure for new towns in England and Scotland will be £1, 092 million and capital receipts over the same period will be about £444 million, so net investment by the Government in the new towns will be about £650 million. There is, therefore, no question of the Government asset-stripping the new towns and giving the money to the Treasury. The flow of money is the other way. That is why we need the Bill, to enable the new towns to borrow more money.
The hon. Member for Edmonton asked about disposals at the behest of the Government. The only directions issued under the Local Government, Planning and Land Act were to the commission concerning £24 million and one to Bracknell development corporation for £7£5 million.
My hon. Friend the Member for Basildon (Mr. Proctor) made a very thoughtful speech. I cannot go further than


what my hon. Friend said about the review of the financial position of the new towns, but I undertake to keep hon. Members informed about the progress of the review. Hon. Members seem to forget that the reason why my hon. Friend represents Basildon and Mr. Eric Moonman is now chairman of an area health authority is that the policy of not selling council houses to tenants was unpopular. Swings against the Labour Government in the new towns were among the largest in the country, and I see that the hon. Member for Harlow is down to his last 1, 400 votes.
My hon. Friend the Member for Basildon spoke with justifiable pride about the shared ownership and other partnership schemes in Basildon. I have been to see them myself and spoken to young couples who had queued through the night to put down a deposit on a property available to them under the shared ownership scheme, which had brought house purchase within their reach for the first time. I was enormously encouraged by the progress being made in Basildon and other new towns in devising ingenious new methods of making house ownership available to people with average incomes. Instead of posing questions, my hon. Friend answered questions and I have nothing to add to what he said when he referred to a parliamentary question tabled before Christmas.
My hon. Friend asked about the liberalisation of the regime for getting private finance into the new town programme. If a new town borrows from the private sector to carry out development on its own account, that expenditure counts as public expenditure and must be controlled as such. It is only when the private sector takes a significant share of the risk that the expenditure does not count as public expenditure.
My hon. Friend referred to a limit on borrowing by the Basildon development corporation of about £500, 000 and asked for it to be increased. I think that he was referring to the limit on its bank overdraft. In fact, the Basildon overdraft limit is £1 million and the development corporation has not asked for it to be increased.
The hon. Member for Dunbartonshire, East (Mr. Hogg) put the matter in a slightly broader context, relating it to the real problems facing parts of Scotland. The Government will do what they can to help the new towns, but they cannot be totally insulated from economic developments in the country as a whole. The new towns stand to gain perhaps more than any other areas from the upturn in the economy that our policies will secure—[Interruption]—however distasteful the prospect of that success may be to the Opposition.
The hon. Members for Dunbartonshire, East and Glasgow, Garscadden (Mr. Dewar) tried to tempt me into Scottish local government issues. After 13 years, I think that I understand local government in England. I considered local government in Scotland, and the learning curve seemed rather steep. I shall ask my hon. Friend from the Scottish Office to write to those two hon. Members about some of the issues they raised. I am sure that those letters will be of the highest quality.
My hon. Friend the Member for Buckingham (Mr. Benyon) urged us to introduce basically publicly owned property companies. We have done that with the urban development corporations in Liverpool and the Docklands.
In a lengthy speech, the hon. Member for Newton asked whether the PSBR would be increased by the measures before the House. The Bill increases the statutory limit and that is necessary to enable new towns to carry out the programmes foreseen in the public expenditure White Paper. Those programmes, taken as a whole, determine the PSBR. The hon. Gentleman was muddled about the legislation on new towns. The legislation of three months ago was basically a consolidation measure, and it would not then have been possible to increase the borrowing limit. I was grateful for his support, but the limit on the consolidation measure was fixed earlier and it was impossible to increase it last autumn. I am grateful for the support that he extended to the newly appointed chairman of the Warrington development corporation and I was delighted to hear of the demand for housing land in his constituency.
The hon. Member for Newton also raised an important local issue about Pewterspear, which I am sure hon. Members should not decry. A three week public inquiry was held last autumn into planning proposals and an associated compulsory purchase order for a science park and high quality residential development on 101 hectares of land at Pewterspear and at the southern end of the new town. The inspector's report is still awaited and the proposals may have implications for the consideration of future infrastructure needs and, particularly, a new high level crossing of the Manchester Ship Canal. They will be considered when we have the inspector's report.
My hon. Friend the Member for Liverpool, Wavertree (Mr. Steen) asked what the money would be spent on. Basically, the money will enable new towns to carry on with the programmes that are set out in some detail in each new town's annual report. It is not being done at the expense of inner cities. When the Minister of State introduced the Bill, he said that public expenditure is now being concentrated on the inner cities. This means that the resources for the new towns will fall, while the urban programme, including provision for the two urban development corporations, is being increased. I can reassure my hon. Friend for Wavertree on that point.
My hon. Friend the Member for Wavertree raised many issues that are for the Treasury to deal with rather than me. However, as I understand it, the borrowing in sterling does not preclude borrowing in pounds, but that must be done by the Secretary of State. The provisions governing from whom a new town may borrow were introduced by the Statutory Corporations Financial Provisions Act 1974.
Successive Governments have taken the view that, in general, public bodies borrowing in long-term sterling should be managed by the Treasury and no use has yet been made of the power to borrow in foreign currencies.

Mr. Steen: I am grateful for my hon. Friend's remarks. However, I urge him to correct one statement in his excellent speech. He said that new town borrowing did not affect inner city investment. Successive Governments have concentrated on the inner cities and neglected the problems of the middle and outer cities.
Will my hon. Friend say something to reassure the majority of the population living in the middle and outer areas of large, industrial cities that the new town development will not be at their expense?

Sir George Young: I hope that I can give my hon. Friend that reassurance. However, it would involve a


rather lengthy intervention into our policy towards inner cities and those areas just outside, one of which I represent. I can assure my hon. Friend that in deciding how resources are allocated, we have in mind the inner city's problems and the outer ring, on which he has written some imaginative leaflets. He will find that our inner city strategy takes on board some of the points that he has made in his thought-provoking literature over the past two or three years.
The hon. Member for Fife, Central (Mr. Hamilton) made it clear that he had two prides—the National Health Service and new towns. For the past two and a half years I have listened to his speech about the NHS and, for the first time this afternoon, I heard his very good speech on new towns, which had some remarkable aspects in common with his NHS speech. The hon. Gentleman hankers after a golden age between 1945 and 1950 and turns a fairly blind eye to everything that has happened since. He called for a Scottish Minister to reply and I have heard the same call time and again during debates on the NHS. The hon. Member for Fife, Central did not set about canvassing Lady Balfour's support for his policies in a tactful way. I am not surprised about how she reacted.
The hon. Member for Garscadden asked what percentage of the money would be available to Scotland. The historical picture is that borrowing in 1980–81 and 1981–82 for Scottish and Welsh new towns was £73 million in the first year and £78 million in the second out of totals of £440 million and £381 million. Therefore, in 1980–81, as I understand it, Scotland received about 16 per cent. and about 18 per cent. in 1981–82.
There has been unanimity on two points during the debate. First, hon. Members have welcomed the Bill and, secondly, deplored the absence of members of the Social Democratic and Liberal Party alliance. Whether or not the alliance has broken the mould is a matter for debate, but its silence certainly remains intact.
Anyone concerned about new towns will be grateful for the interest and commitment of those hon. Members representing them who have spoken. The Government share that interest and commitment and the Bill before the House is evidence of that.

Question put and agreed to.

Bill accordingly read a Second time.

Bill committed to a Committee of the whole House.—[Mr. Thompson.]

Committee tomorrow.

NEW TOWNS (MONEY)

Queen's Recommendation having been signified—

Resolved, 
That, for the purposes of any Act of the present Session to increase the limit imposed by section 60 of the New Towns Act 1981 on the amounts which may be borrowed by development corporations and the Commission for the New Towns, it is expedient to authorise any increase in the sums—

(a) falling to be paid out of or into the National Loans Fund or the Consolidated Fund, or
(b) falling to be paid out of money provided by Parliament, being an increase attributable to provisions of the said Act of the present Session increasing to £5, 000 million the limit imposed by the said section 60 on the amounts outstanding in respect of borrowing by the development corporations and the Commission.—[Mr. Thompson.]

Transport (Finance) Bill

Not amended (in the Standing Committee), considered.

Mr. Deputy Speaker (Mr. Ernest Armstrong): Before I call the first amendment, I have been asked whether it will be in order to refer to the current industrial dispute affecting British Railways. Of course, it will be in order to discuss the consequences to British Rail finances of the dispute and the importance that hon. Members attach to a settlement. However, I do not consider that the Bill provides an appropriate opportunity to discuss the details of the dispute.

Clause 1

INCREASED BORROWING LIMIT FOR THE BOARD

Mr. Albert Booth: I beg to move amendment No. 1, in page 1, line 12, at end insert—
'(2) Before specifying any greater sum the Secretary or State: shall lay before the House of Commons a statement of the estimated annual External Finance Limit for the British Railways Board over a 10 year period.'.

Mr. Deputy Speaker: With this it will be convenient to take amendment No. 2, in page 1, line 12, at end insert—
'(2) Before specifying any greater sum the Secretary of State shall lay before the House of Commons a statement of the extent of capital debt attributable to British Railways Board's programme of main line electrification.'.

Mr. Booth: On Second Reading we discussed the British Railways' financial problem. Now that we are or Report, there is a British Railways financial crisis and an acute industrial relations problem. However, the purpose of amendment No. 1 is to require the Secretary of State to lay before the House a statement of an estimated external financing limit for a 10-year period before he specifies increases in the aggregate borrowing of up to £1, 300 million provided for British Rail in clause 1. It is impossible to plan the development of British Rail on a year-to-year basis. It would be impossible to do that at arty time, and it is certainly impossible to do it when a major modernisation programme requiring massive investment has to be carried through. That is not an argument that is necessarily peculiar to British Rail. It may be applied to other major industries both private and public. However, we are now concerned with British Rail and its finances.
The first amendment concerns the external financing limit and the second relates to the electrification programme. The EFL has become increasingly a restraint on British Rail's investment programme, especially that part of it that is dependent on borrowing. That in itself has proved over the past year or two to be a serious limitation.
We appreciate why the Minister wishes to have the right to approve individual major investments and discuss them with British Rail. We make no complaint about that. It is right and proper that the Minister should be concerned to that extent in the way in which British Rail's investment programme develops. However, a matter for major concern is that, whatever approvals may be sought for individual investments and investment programmes, the EFL is now becoming the limitation on the effective development of a major long-term programme.
Although the Government have increased the public service obligation so that British Rail may sustain the parts


of the network that are needed for social purposes and that cannot pay their way, there is an element of investment within the PSO. There is also the interest to be paid on the sums which British Rail has had to borrow to carry out part of its investment programme. The PSO increases without there being a commensurate increase in the EFL, but that does not permit any significant increase in the investment programme. The only relief that it gives, arguably, is the extent to which it reduces the interest that would have to be paid if further borrowings were made available. Therefore, the increase in the PSO has added nothing significant to British Rail's ability to invest in a network.
To be fair to the Government, they never claimed that that was intended. They said that the increase in the PSO was designed to help British Rail to deal with the problem of the fall in its receipts as a result of the recession. That leaves us with a major problem in British Rail's investment programme and the extent to which that is cut by the EFL.
The Under-Secretary of State does no service to the serious argument about the limitation on the investment programme brought about by the EFL by reiterating, as he so frequently does, that the investment ceiling will be kept the same in real terms. He is saying that at a time when there is not a possibility, without other major changes in British Rail's financing, of the investment ceiling being reached.
We have arguments about the best way to measure investment expenditure, but I hope that we shall be able to agree tonight that until there is an external financing limit that will allow British Rail to reach the investment ceiling there is little point in arguing about that ceiling. Railway investment has fallen when it should be rising to cope with a specified need to develop the railways.
About £20 million less was spent by British Rail in 1981 on specific railway investment than was spent in 1979. If we consider British Rail's entire investment on services other than rail services, the reduction was much more acute. It is crucial that the Government respond to the major proposition that has been advanced by British Rail.
What is to be the investment pattern for the next 10 years or even for the next five years? In the corporate plan a five-year investment programme was put before the Government. In March 1981 the British Railways Board decided to make public the investment proposals that it had submitted to the Government. Since then it has been possible for everyone who is interested in these matters to examine the way in which British Rail proposes to sustain and develop our railway network.
British Rail said that the implementation of its corporate plan for 1981–85 would require average investment expenditure of about £441 million a year. It said that the implementation of its full rail policy proposals for the decade would involve an average investment of £567 million a year.
The British Railways Board made it clear that the existing programme, which was costing about £306 million a year, was not adequate even to sustain the existing network, let alone to carry through any of the major modernisation programmes that it considered necessary or desirable. It proposed in the policy document that another £72 million a year would be needed for the renewal of assets and recovery against a backlog of deterioration in the system.
British Rail included in the estimates £36 million a year for the electrification programme. The exact figure would have depended on which of the five electrification options the Government decided upon. My hon. Friend the Member for Aberdeen, North (Mr. Hughes) will be seeking to catch your eye, Mr. Deputy Speaker, so that he may deal with the specific electrification issues that are referred to in amendment No. 2.
The crucial issue is not so much the sum involved—£36 million is a relatively small proportion of the £567 million a year which British Rail is discussing—as the efficient implementation of many other parts of the programme. Beyond those proposals was investment in the London and South-East network. I refer to the improvement of the commuter services which I understand the Government have since rejected, the enhancement of the Gatwick and Stansted services and the Government's Channel tunnel proposal.
At that time the British Railways Board believed that it would be possible to persuade the Government to allow it to seek private finance for a number of the elements within the programme—for example, for main line electrification, the enhancement of the Gatwick-Stansted services and the fulfilment of the Channel tunnel proposals. It believed that each element offered prospects of returning real rates of return on investment of more than 10 per cent. That is still undecided.
Although from my political standpoint I would prefer public investment in those elements of the railway service which could make a real return of over 10 per cent., I do not take a doctrinaire view that those decisions should stand still until there is a Government of my persuasion. If those decisions are necessary for the development of the rail service, I would prefer to see them made under financial arrangements that the Government might reach with British Railways than that they should remain at a standstill, as they are now. All those elements of the investment programme, curtailed by the way in which the external financing limit is operated, are being stultified and stopped when it is important that decisions should be taken.
8 pm
The financial stranglehold on that development by British Rail, of which that restriction is so important a part, has contributed considerably to the current industrial dispute. It has considerable ramifications for the immediate financing of British Rail and the way in which the PSO is used in the present year. There is a likelihood that the board will call earlier than otherwise on the borrowing that could be provided under clause 1.
That financial stranglehold influenced the British Railways Board to refuse to pay the original Railway Staff National Tribunal award, which led to British Rail and the rail unions going to the Advisory, Conciliation and Arbitration Service. As a condition of the tribunal award British Rail pressed the unions to give considerable undertakings about productivity in circumstances that, even on the most favourable assumptions, were highly unlikely to produce the results that British Rail wanted.
The people who work in British Rail are a committed work force. They are more concerned than most people that there should be a future for British Rail and a sensible investment programme. They see the contribution that


they can make through productivity agreements to the success of British Rail, and to improving its overall services and productivity.
However, those people are sensible and knowledgeable enough about the British Rail system to know that major productivity improvements over the next decade to give Britain a modern and efficient railway service also require as an essential corollary of their productivity arrangements a sensible and major investment programme. In unfavourable circumstances, brought about by the Government not being prepared to make investment commitments, the unions were pressed to make productivity commitments. The British Raiways Board was also not prepared to honour the tribunal award without additional undertakings. That led to a difficult situation.
The unfavourable financial circumstances arose partly because of the massive manpower savings that had been made in the productivity negotiations of British Rail. Between 1970 and 1979 the railway staff had been reduced by negotiation and productivity arrangements—some small and some larger—by 30, 200. That was a considerable achievement. The corporate plan for 1981–85 which the British Railways Board put to the Government and the unions would have involved a reduction of a further 38, 300 posts over that 5-year period. It also involved investment. Understandably the unions were prepared to continue that pace of manpower reduction only with the investment proposed. In fact, the proposed pace was much faster. Twice the previous pace of cutting manpower was called for.
Therefore, the current dispute not only jeopardises what is, by any fair test, the precarious financial position of British Rail, but, more inportantly, what has been a priceless asset, which is the commitment to work well and provide a good service, which has produced a good industrial relations record in British Rail.
The British Railways Board, by refusing to meet the obligations to pay the award, which has been due since the beginning of this month, has faced enormous financial implications. The loss of income to British Rail as a result of the dispute will have to be counted when it draws finance from the PSO. It will not draw finance from industrialists sending freight or from passengers who are trying to travel on British Rail services during the dispute.

Mr. Robert Adley: The right hon. Gentleman has referred to the refusal of the British Railways Board to meet its obligations. Is he suggesting that the unions have no obligations, or that if they do they should not meet them? Will he share his thoughts with us? It is important to know what he feels.

Mr. Booth: That is an important matter. I understand that the British Railways Board was informed by the general secretary of the Trades Union Congress that he was assured by the railway unions concerned that they would resume negotiations immediately, within the rail industries negotiating machinery, on all the outstanding productivity issues, provided that British Rail met its obligation to pay the outstanding balance of the pay awards. Therefore, the two matters are closely connected.
It is my judgment—for what it is worth—as a life-time trade unionist and an ex-Secretary of State for Employment and having read the agreements, that in the last analysis the productivity aims identified in the ACAS talks following the refusal of British Rail to pay the initial

tribunal award will have to be settled in the established machinery of British Rail. Such is their complex nature and their implications that they can be handled only by people who are experienced in the industry and with the industry's machinery.
If the dispute is settled with that machinery later rather than sooner, it will be at the cost of damage to the industry when its maximum development is crucial. The industry is coming to a watershed in its investment programme. If major expenditure on replacement is not started by next year, the only alternative will be a rapid rundown of the railway system.
What is needed now from the Government is a commitment not only to maintain the existing network and services, but greatly to improve them. Major investment decisions should be made, certainly the central decision on electrification. Above all we need a programme, not on a year-to-year or line-by-line basis, but for a decade.
The purpose of the amendment is to call upon the Government to lay before the House, before we proceed to use the financial provisions of clause 1, an external financing limit that is based on the concept of a programme for a decade in the development of British Rail.

Mr. Adley: As the right hon. Member for Barrow-in-Furness (Mr. Booth) said, this is a difficult time for the railway industry. I hope that he and the House will accept that I am a friend of the railways. I am a passionate believer that a railway is an essential component of a civilised society. I am also conscious, Mr. Deputy Speaker, of your ruling, which I believe is right. There can be no doubt that the current dispute, to which the right hon. Gentleman referred—not quite even-handedly—must inevitably jeopardise the investment programme of British Rail. The 1980 annual report and accounts, under the heading "Managing Change", puts it succinctly. It states:
The plan is explicit about BR's commitment to managing change, tailoring resources to business needs and negotiation changes in working practices. Higher investment will also lead to improved productivity.
On that basis, Mr. Deputy Speaker, we must be allowed to touch on the background to the dispute, but, of course, not to enter into the details of what was said, by whom, to whom. It is a matter of judgment and we shall have to rely on your judgment.
This is a sad strike. I hope very much that it will not become a party political issue, and I am sure that the right hon. Member for Barrow-in-Furness would join me in that. There is nothing that he has said recently that could be construed to be provocative, but I understand the pressures that he is under, both from within his party and from within the trade union movement.
The words that I have written down in my notes are similar to those of the right hon. Member for Barrow-in-Furness. I believe, as he does, that if anything jeopardises or influences the future financing of British Rail, we must discuss it tonight. There is no doubt in my mind that this current dispute is jeopardising British Rail's financing programme. The Government and every hon. Member realise that and British Rail realises it best of all. If the strike drags on much longer it will inevitably have a damaging influence on the attitude of Government towards investment in the railway system.
The railways have enough enemies as it is, without having to cope with the problems of a vicious and damaging inter-union dispute. That is what is at the heart of the present problem. As the right hon. Gentleman said, 


British Rail has a good record on industrial relations. The unions have supported major changes in the structure of the railways, but, as those words that I quoted from the annual report and accounts clearly indicate, the process of investment and the process of managing change, and changes in working practices, go hand in hand.
Understandably, we heard a great deal earlier this afternoon of concern about jobs. We are all concerned about jobs and unemployment. Those of us who look to the railways to provide increasing secure employment in the future in a modern railway system cannot but be immeasurably saddened by the effects that the dispute must inevitably have upon the prospects of secure, longterm employment in the railway industry. ASLEF's action will affect investment, and the Government, who are also the guardian of the taxpayer, are inevitably bound up in investment decisions because they have to assess how much taxpayers' money to make available for major new programmes such as electrification.
The spirit of the amendment moved by the right hon. Member for Barrow-in-Furness is one that I support. The Government have talked about a 10-year electrification programme. Therefore, if one is discussing the external financing limits of British Rail and a 10-year rolling electrification programme, the two go hand in hand and it makes sense to recognise that fact in the legislation that we pass in the House.
I repeat, en passant, a comment that I have made in the past about electrification. The railways have enough enemies. We are constantly told by the road lobby that investment in the railways is unnecessary and overgenerous, but no one, in the House or elsewhere, asks how much profit or loss the M4 motorway made this year. We have never had to see an annual report on the motorway system. The benefits of electrification of the west coast main line are self-evident, and are a self-evident advertisement sufficient for the Government to recognise the importance of electrification in providing this country with a modern and efficient railway system with all the industrial benefits that flow from a modern transport infrastructural system.
8.15 pm
This dispute undoubtedly is threatening the electrification programme. We must face up to that and we must discuss the effects of the dispute upon the electrification programme. I understand that the current dispute is costing British Rail about £6 million a day. I do not know what the Government's view of that is when they assess the external financing limits of British Rail in the current year. I do not know what the Treasury will say. I am sure that the hon. Member for Nuneaton (Mr. Huckfield) will pick me up on this, but I say it because it is self-evidently true: the Government are bent on a policy of encouraging industry to modernise. Modernisation and efficiency should go hand in hand. The British Railways Board is trying desperately to modernise the railway system and to make it more efficient. Included in that is the modernisation of working practices. Therefore, if Sir Peter Parker and his board regard that as an essential component in the modernisation programme, if the Government want industrial modernisation generally, and if the British Railways Board is forced to suffer the effects of the current

dispute on its finances, I suggest that that is not a matter that the Treasury can honestly ignore when it assesses British Rail's external financing limits in the current year.
You will tell me that I am out of order, Mr. Deputy Speaker, if I go too deeply into the current dispute. I feel sorry for Mr. Buckton because he is being pushed from behind by people such as Mr. Ronksley and Mr. Fullick, who have a long history of militant action in the railway industry. The railwaymen themselves have had no ballot to decide whether they want to be bulldozed into a strike, and it is now far too late to consider a ballot. I ask myself one simple question. Four people signed an agreement. Did they know what they were signing?

Mr. Deputy Speaker: The hon. Gentleman must not go into what was behind the signing. He can discuss the consequences of the dispute on the finances of British Rail but he must not drift into an argument about what was or was not signed, otherwise he will be out of order.

Mr. Adley: I accept your ruling, Mr. Deputy Speaker and I shall sincerely try to keep within it.
If the two other unions have signed an agreement that they understand, it is essential that the third—

Mr. Deputy Speaker: Order. The hon. Gentleman is straying again. He is out of order and he must not continue to discuss that point.

Mr. Adley: I shall content myself with saying that it is in the interests of those who have the welfare of the railways at heart to see the dispute ended as quickly as possible. It behoves those of us who feel as I do about the dispute to take opportunities when presented—which appears not to be the case tonight—to say what they can to try to encourage ASLEF to realise the damage that it is doing to future investment in the railways.
I am sorry that we shall not have the opportunity of hearing any words of wisdom from members of the Social Democratic Party this evening. They are gracing us with their usual absence. They include among their numbers a former Secretary of State for Transport and a former president of the Transport and Salaried Staffs Association. I hope that it is not too much to expect that at some time they will break their vows of silence and tell us what they think about the dispute.
On a completely different issue, but still related to finance, I should like to ask whether my hon. and learned Friend the Under-Secretary has yet had a chance to discuss with Sir Peter Parker the question of the Ribblehead viaduct. This is a question of £6 million that British Rail could be asked to find to keep a main line railway open. The amount is just part of the costs that British Rail has to bear.
The general manager of Western region informed me today of the huge sum that will have to be spent on the station at Frome because a preservation order has been slapped on it. I do not believe that people always give British Rail a fair deal. They do not realise the enormous sums that it has to pay, year in and year out, to fulfil tasks that are environmentally attractive but that have no bearing on the financing of a modern rail system. I should like to see included, at some stage, within the financing structure of British Rail, sums provided by the taxpayer to do not what British Rail wants to do but what we, in this country, demand of it for environmental and other reasons.
I apologise, Mr. Deputy Speaker, if I have tested your patience and strayed too far into controversial matters. I


hope that the investment programme will go ahead, that electrification will proceed and that the 10-year programme that the Government have outlined will become a definite 10-year programme and that it will not keep appearing in dribs and drabs, which is an inefficient way to run a railway modernisation programme.

Mr. Les Huckfield: I hope that the hon. Member for Christchurch and Lymington (Mr. Adley) will excuse me if I do not attempt to take up his remarks. I am sure that he will understand that I am genuine in saying that the ability to write books on steam engines does not make him a railway man. Although the hon. Gentleman undeniably has an interest in railway matters, I suggest that he should acclimatise himself with more of the actual workings of current practice on the railways before making some of the statements that he has uttered in the debate.

Mr. Adley: Will the hon. Gentleman give way?

Mr. Huckfield: I do not intend to trespass on your generosity, Mr. Deputy Speaker. I recognise what you said about any reference to the current dispute so far as it affects the Opposition amendment on the external financing limit. As my right hon. Friend the Member for Barrow-in-Furness (Mr. Booth) so ably stated, the Government have tried to attach productivity conditions to the determination of the external financing limit. I hope, therefore, that any references that I make to productivity mean that I shall be within the bounds governed by a discussion on the external financing limit.

Mr. Adley: Will the hon. Gentleman give way?

Mr. Huckfield: As the hon. Gentleman is bound to continue getting up and down like a jack-in-the-box, I shall give way.

Mr. Adley: The hon. Gentleman alleges that I am not in touch with current railway practice. How many motive power depots has he visited in the last three months? Does he know what they are?

Mr. Huckfield: I was practically brought up in one. Anyone who has studied the present dispute and the references made to it by my right hon. Friend must have recognised that the British Rail board is operating within tight financial constraints determined by the Government. The corporate programme of the board for 1982–83 asked for an external financing limit of at least £1, 100 million. If it were to carry out the full range of the policy options in the document "Rail Policy", it could ask for £1, 250 million. I understand that the Government have set an external financing limit of £950 million which, although a £30 million increase on last year, represents about a 10 per cent. real cut, taking account of a 12 per cent. rate of inflation, if one accepts the Government's most optimistic figures. I hope that the Government recognise that it is the reduction in the real external financing limit that lies behind a great deal of the dispute.
The board forecasts a planned overshoot on EFL of £200 million in 1982–83 together with a planned overshoot on the public service obligation grant of £202 million. The board forecasts a group loss, after interest paid, of £197 million. Those are worrying figures. The board is saying that, with the reduction in EFL and PSO received from the Government, in real terms, it still plans an overshoot. It will be understood that the board's PSO bid was increased from £644 million to £674 million. Although there has been a recent increase of £80 million to £754 million and

although a further increase of £30 million is planned, we are still talking of about a 10 per cent. decrease in real terms.
The Minister will make reference to the fact that the external financing limit is being raised. It does not matter whether he uses 1980 prices or outturn prices. The hon. and learned Gentleman will recognise that in real terms he is talking about a decrease in both EFL and PSO limits. That is the outline of the present dispute. It is the outline to which I wish, in deference to your words, Mr. Deputy Speaker, to tailor my remarks about productivity and some of the current issues.
The Government talk about the need for productivity. They talk in terms of the ability of the board to accommodate itself within these limits if there is increased productivity. I am bound to say that I do not find the board doing much to increase productivity. Most of its actions over recent weeks seem deliberately designed to ensure no productivity at all. If the board sincerely wants to increase productivity, there is plenty that the board can do to ensure that this happens.
I should like to refer to some of the board's statements about the external financing and PSO limits that have been fixed. The rail policy document stated that, within 10 years, 3, 000 miles of track would be unsafe to use and 800 miles would carry speed restrictions. Those are the hoard's own forecasts. I support my right hon. Friend's amendment stating the need for hon. Members to know the EFL constraints that will operate over the next 10 years. Is it the Government's intention continually to decrease EFL and PSO in real terms? If that is the longer term policy, there will be even more difficulty on the railways, particularly if the board takes the attitude that it has adopted recently towards productivity talks. It is, of course, within those limits that I have described that the current arguments about productivity, or what are alleged to be arguments about productivity, are taking place.
I speak in the House as the parliamentary spokesman for the Associated Society of Locomotive Engineers and Firemen. I am sponsored not by that union, but by the Transport and General Workers Union; under an agreement between the two unions I speak on behalf of ASLEF in the House because it does not have a sponsored Member. That understanding is registered in the Register of Members' Interests. [Interruption.] That is the interest that I have. Of course, I speak on behalf of my constituents as well.
If the hon. Gentleman wants to talk about productivity, he must recognise that there is machinery for that productivity and that there is an environment in which that productivity is to be discussed. For example, the pay situation has to be determined within the external financing limit. When the ASLEF case, again bounded by the constraints of the external financing limit, was submitted to the Railway Staff National Council in March of last year, the general secretary of ASLEF, Mr. Ray Buckton, said that to restore the purchasing power of footplate staff to its 1975 level there would need to be an increase of 29·2 per cent. in basic pay. If we look at the pay of footplate staff and exclude the unsocial hours payment, we see that they have slipped to about 68th place in the league table, which puts them £72 behind the front runners.

Mr. Matthew Parris: On a point of order, Mr. Deputy Speaker. The hon. Gentleman is


speaking about the current railway dispute. I imagine every hon. Member has a speech about the current dispute. I listened to your ruling, Mr. Deputy Speaker, on what was said by my hon. Friend the Member for Christchurch and Lymington (Mr. Adley). If we are talking about the dispute, other hon. Members and I are willing to make our contributions, but it is not clear to me what the debate is about.

Mr. Deputy Speaker: It ought to be. I am listening carefully to what hon. Members are saying. As I said, it is in order to discuss the consequences for the finances of British Rail of the present dispute, but not to go into the merits and demerits of what was signed and so on. I am listening very carefully.

Mr. Huckfield: I hope I have not trespassed beyond your ruling, Mr. Deputy Speaker. The point I seek to make—I hope the hon. Member for Derbyshire, West (Mr. Parris) will follow me carefully—is that by 1988 about one-third of footplate staff will have retired. That means that they will have to be replaced in one way or another. That is why we put down the amendment. The British Railways Board will need to know what external financing limits will be set for it for the next 10 years. Obviously the external financing limit will have a great influence on the ability of the board to replace those staff. That is why I gave the figure which I did. I hope the hon. Gentleman will follow me carefully, because I am trying to put a case about the need to know on the part of the trade unions and of the British Railways Board.

Mr. Adley: Will the hon. Gentleman allow me to make a point?

Mr. Huckfield: If the hon. Gentleman wants to make a helpful point, yes.

Mr. Adley: Will the hon. Gentleman remind the House how many locomotives British Rail has and how many members of ASLEF there are?

Mr. Huckfield: No doubt the hon. Gentleman wants to prolong the debate in his own way. If he wants to quote the Richard Hope figures—we all know the Richard Hope figures and we all know Richard Hope's anti-union views—he may divide the total number of staff by the total number of locomotives; he may do all sorts of calculations and no doubt he will come up with all sorts of unfavourable figures. We could come up with favourable figures as well. If the British Railways Board wants to talk about productivity and to discuss some of the figures to which the hon. Gentleman is referring, there is adequate machinery to do it. It is from that machinery that the British Railways Board has extracted the current productivity discussions.

Mr. Robert Hughes: Will my hon. Friend also point out that in the bus industry there are many more bus drivers than there are buses, because the buses are on the roads a long time but the drivers have to work a shift system? Similar figures could probably be produced for the road haulage industry if the lorries are being used with different crews driving them.

Mr. Deputy Speaker (Mr. Bernard Weatherill): I am sorry to interrupt so soon after taking the Chair. I heard what my predecessor in the Chair said. We must not go into the details of this dispute.

Mr. Huckfield: Obviously I bow to your ruling, Mr. Deputy Speaker, as I bowed with great deference to the ruling of your predecessor. I was simply referring to the fact that over the next 10 years—this is what amendment No. 1 is all about—the British Railways Board will need to know the external financing limits to be set by the Government because it will need to assess the effect of those limits on recruitment policy and on the wages that it may pay. That is why I made the point that evidence was presented by ASLEF that to restore the 1975 purchasing power an increase of 29·2 per cent. was needed. Even according to the board's unpublished part of its corporate review document in 1980 it admits that real earnings have fallen 8 to 12 per cent. below the national average.
That is the position that the board finds itself in now. If it has to replace about one-third of its footplate staff by 1988, of course it will want to know within what kind of external financing limits it will have to operate its recruitment policy.
The vice-chairman of the board has argued before a Select Committee that there are already recruitment and retention difficulties at the present level of salaries. The Leeds university study of British Rail in 1977 conclusively showed that on British Rail there are the longest hours and the lowest wages in the whole of Europe. That is the present wage pattern. That is why the board and the unions need to know the external financing constraints within which they will have to operate over the next 10 years. That will clearly affect recruitment.
In that context I was pleased to note what was said in Decision No. 75 of the Railway Staff National Tribunal of July 1981, when the tribunal awarded the 8 per cent. and the additional 3 per cent. currently the subject of some contention. The tribunal, which is part of the railways' machinery for settling disputes, at paragraph 190, said:
Moreover, all parties have pointed out that already substantial progress has been made as a result of negotiations last year".
It was talking about negotiations on productivity.
We welcome this development and hope that if our decision gains acceptance further and more substantial progress will be achieved.
If the hon. Gentleman wants to refer to productivity within the external financing limits, I point out that the tribunal has already referred to the increase in productivity and has already given its blessing to the improvement, which it hopes will continue.
Increased productivity within the external financing limits was part and parcel of the ACAS understandings that were achieved—

Mr. Deputy Speaker: Order. The hon. Gentleman is now beginning to discuss the details of the dispute. Other hon. Members have not been able to do that, and I must ask the hon. Gentleman to bow to the ruling given before I took the Chair.

Mr. Stuart Holland: Two main varieties of costs are involved in an enterprise such as British Rail. One is capital costs and the other is variable costs. It is very difficult for the House seriously to consider any of the provisions of the Bill relating to finance unless it is valid for it to consider variable costs, which involve wages and manning. Otherwise, with due respect to you, Mr. Deputy Speaker, much of the discussion of the Bill becomes meaningless.

Mr. Deputy Speaker: The hon. Gentleman may not have been present when my predecessor in the Chair gave his ruling. It may be wise for me to read out again what he said:
it will be in order to discuss the consequences to British Rail finances of the dispute and the importance that hon. Members attach to a settlement. However, I do not consider that the Bill provides an appropriate opportunity to discuss the details of the dispute.
That is the point that I was making—that the House must not discuss the details.

Mr. Huckfield: I am struggling manfully, and I thought successfully, to keep within the bounds of that ruling, Mr. Deputy Speaker. I do not want to trespass on your generosity. I simply want to say that the productivity discussions clearly will have to take place within the confines and constraints imposed by an external financing limit. That is why we have suggested in the amendment that we need to know what kind of external financing limit that will be over the next 10 years.
The difficulty is that if the external financing limit is to be constrained by cash limits, as the public service obligations grant will be, it is difficult for the board or anybody else involved in negotiations to know what the policy will be. It is because we need to inject longer-term certainty into the negotiations that I have referred to a few of the difficult issues, trying to show how we can best inject some certainty into discussions on some of those issues if we know over a longer term of years what the external financing limit will be.
The ACAS understanding was written in that spirit, because the productivity part was entirely separate from the pay part. The ACAS part of the understanding makes specific mention of the fact that, if agreements are reached on certain productivity items, there will be specific payments made within the EFL for them.

Mr. Deputy Speaker: Order. The hon. Gentleman is getting into the detail of the matter again. I must ask him, please, to stick to the ruling that has been given. It is only fair to other hon. Members who have done so.

Mr. Huckfield: I have tried to set the scene in which this set of negotiations and the further series of negotiations will take place.
I should like to refer to the impact of productivity items on the board's financial position. I am sure that the Minister will recognise that it is the impact of productivity discussions on the railways' overall financial situation that will affect the board's longer term borrowing needs and, consequently, the demands that it will make upon the Government.
Because of the comparatively low wages on the railways, including those for footplate staff, and because of the need for a substantial replacement of staff over the next five years, I can see the board's external financing limit needing to be raised, as a large amount of recruitment will be needed. That, again, is why we need to have some certainty injected into our knowledge of the external financing limit over the next 10 years.
Hon. Members who have studied the productivity discussions which have been taking place recognise what the Government have been saying about the need to achieve productivity. If we are to achieve productivity increases to fit in with the external financing limit set, there is much discussion that the board could have which would bring about substantially larger increases in

productivity and reductions in costs than in the current discussions on some of the items at present. That is why many of us cannot understand why attention should have been concentrated on one particular productivity item. Far bigger savings and increases in productivity could have been attained from discussion elsewhere.
Perhaps the board has an inkling of what the EFL might be over the next two or three years. That may be why it has chosen to concentrate on this particular item. I repeat that there are certainly items of negotiation that would lead to far bigger increases in productivity and cost saving than this particular item. If the board wants to discuss any of these items to fit in with the EFL restraints there is a perfectly adequate, tried and tested machinery through which discussion can take place.
In the context of the need to know what the external financing limit will be, it is obvious that the dispute will not be settled easily. If it is not settled quickly, I can see the board needing to come back to the Minister for an even larger EFL. That is why many of us cannot understand why, when an award has been made at the Railways Staff National Tribunal and an award and understanding has been achieved through ACAS—having gone through two sets of arbitration already on the productivity item—there needs to be an even further set of arbitration procedures. If the board genuinely wants to talk about productivity increases, there is adequate machinery to do so.

Mr. Adley: On a point of order, Mr. Deputy Speaker. I was forbidden to finish a sentence when I was asking why, when four people had signed an agreement—three unions and the British Railways Board—three understood it and one did not. Why does there appear to be one rule for hon. Members on one side of the House and another for those on the other?

Mr. Deputy Speaker: Order. The hon. Gentleman might rephrase his point of order.
I made it plain to the hon. Member for Nuneaton (Mr. Huckfield) that it was not in order to refer to the detail of the dispute. I said that it was unfair to other hon. Members who had been stopped from doing just that. I ask the hon. Gentleman to refrain from doing so. We have had enough of the dispute. Let us get on with the subject of the amendment.

Mr. Huckfield: That is what I thought I had been trying to talk about. I was trying to talk about the need for certainty in forecasting and assessing—not least, fixing—the external financing limit over the next 10 years. Partly because the board has had to operate with a short-term time horizon, it has been forced to take the attitude that it has.

The Under-Secretary of State for Transport (Mr. Kenneth Clarke): May I assist the hon. Gentleman, who is having difficulty in keeping his argument in order? The case from the Opposition Front Bench was that the external financing limit may need readjustments to cope with capital investment and the need to modernise the railway. The hon. Gentleman appears to be making a case in addition to that. Without a commitment to productivity on their part, he wants the EFL increased to provide higher wages for the members of the union on whose behalf he happens to be speaking. Is that right?

Mr. Huckfield: I hope that I can answer the question within the rules of order.

Mr. Adley: The hon. Gentleman need only say "Yes" or "No".

Mr. Huckfield: The Minister makes the classic mistake that all his colleagues and most members of the press and others who have tied to assess the dispute make. The dispute is not about productivity. The hon. and learned Gentleman has chosen tonight once more to link pay and productivity. I am sure that his officials brief him daily, so he should know that the dispute is simply about the fact that the British Railways Board made an agreement to pay an additional 3 per cent. and has now ratted on the agreement.

Mr. Deputy Speaker: The House has taken the point. The hon. Gentleman is again getting back to the detail of the dispute. Let us move on to British Rail's external financing limit.

Mr. Huckfield: I have got that point off my chest and into Hansard. I hope, too, that the Minister has understood it. It is most pertinent to the dispute.
The Minister asks whether I am venturing to suggest an external financing limit increase to pay wage increases. The hon. and learned Gentleman should know that the unions will not force that necessity on the Government; the board's behaviour will do so. Because of its completely intransigent attitude—not to mention telling lies on television—and the loss of about £6 million a day, the board will need to ask the Government for an increased EFL. The trades unions will not necessitate the increase.
I finish where I tried to come in. Many of us who take an interest in railway matters genuinely want to know what the Government mean by productivity discussions within the external financing limit. If they mean to bring about the increase in productivity that they say they wish to see on the railways and to keep it within the proposed EFL, perhaps the Minister should intervene and tell the board that it can get the productivity increases only if it is prepared to discuss them through the established machinery. If it is to do that, it will need to know what the external financing limit will be over the next 10 years, and if it is not to be increased, and if there is to be no increase in the request for another EFL estimation, perhaps the board might start by paying the 3 per cent.

Mr. Stephen Ross: I apologise to the right hon. Member for Barrow-in-Furness (Mr. Booth) for not being here when he spoke on his first amendment, which I support. Anything that enables British Rail to plan its future activities and thus make more realistic budgets should promote more efficient railways. Since my party gave me the task of speaking on transport affairs I have tried to press the Government into doing rather more rather more speedily to provide more financing for modernisation, particularly for electrification.
This is a difficult time to discuss the future of British Rail because of the dispute. I do not agree with the hon. Member for Nuneaton (Mr. Huckfield). I can read agreements. I accept that British Rail has been at fault—it should have faced some of these difficulties a long time ago. My reading of the dispute does not accord with that of the hon. Member for Nuneaton, but neither does it accord with that of the secretary of the National Union of Railwaymen. My one qualification on this subject is that my son is a member of the NUR.
I am a supporter of the railways. I want them to succeed and I feel that the present Government have not done enough to help British Rail in the last two and a half years, and certainly not in the last six months, since the change of Secretary of State. It took a great deal of pressing from the House to obtain the East Anglian consent from the Government, who denied that they were even considering it. However, my patience as a travelling member of the public is exhausted by what is now happening. One can see the finances of British Rail disappearing overnight. What is happening is suicidal and must be settled, and settled quickly.
I have twice travelled back to my constituency in a fast coach. I was surprised to find that the journey takes only two hours from Victoria coach station. The journey costs £4 or £2·50 if one has not booked. The general public will be frustrated and thoroughly brassed off with British Rail if the dispute goes on for much longer. What is worse, it has occurred during the worst winter in living memory. If there was a real dispute, surely the union could have waited for a fortnight. The public will say that they have had enough and they will not have any more—they will use the other options.
The Government will, quite fairly, say that the money cannot be made available. It is difficult to stand on this pitch and plead for the railways as I do, but it is common sense that we should be travelling more on public transport and that we should be putting more on the railways. For that reason, I agree with the GLC. What is happening on London Transport is mad and many Conservatives take that view.

Mr. Huckfield: The hon. Gentleman voted against the GLC policy.

Mr. Ross: I voted against it because it was breaking the law.
I support the GLC's policy. I paid my supplementary rate of £60 and I travel on public transport.

Mr. Deputy Speaker: Order. That has nothing to do with the Bill.

Mr. Ross: I wanted to put my support on record.
It is difficult for one who wishes to support the railways and see them succeed to plead for a higher external financing limit for a longer period when the dispute is continuing. It is in our midst at a time when many of us are in despair at the future of the railways.

Mr. Robert Hughes: I intervene at this stage, unusually, not to wind up for the Opposition, but to deal specifically with amendment No. 2 on electrification.
However, first, I want to take the Under-Secretary to task for not fulfilling the undertakings that he gave in Committee. He told us at column 99 of the Committee proceedings that he would write to me about the issue of section 8 grants for sidings and planning permission. He has not yet done so. Perhaps he has been otherwise occupied. Moreover, at column 186 he promised to write to me about the criteria to be used to allow section 36 grants for waterways. That is a more serious matter. He confessed in Committee that he had forgotten that his right hon. Friend the previous Secretary of State for Transport had promised in July to write to my right hon. Friend the Member for Barrow-in-Furness (Mr. Booth) about the extension of these special grants for freight transport. He has still not written to me either. I hope, therefore, that he will fulfil the undertakings that were given in Committee.
I come now to electrification. I am sure that the time for a decision by the Government on the amount of investment to be made available to British Rail for its electrification programme is long overdue. There is common agreement in the industry and between the British Rail Board and the unions that the current rolling stock and equipment that are available to British Rail is inadequate. There is also general agreement in all quarters of the House in this connection.
British Rail is quite clear on the subject of maintaining and raising the standard of service. It says in its rail policy document, paragraph 4.12:
The greatest danger facing the industry is therefore that funds would be insufficient to sustain even the present inadequate investment programme, and that the critical year 1981 will be passed without the necessary commitment to replacement. None of us in British Rail would derive satisfaction from operating a railway which provides quality standards becoming steadily less and less acceptable to our customers. Bare survival may be the lowest objective which an organisation can adopt but it is an insufficient diet for a great national industry".
The document goes on to say, in paragraph 4.13:
The single most significant decision is Electrification. A favourable decision covering how quickly to proceed and when to start would give hope to all of us in BR, would point us in the right direction for all of the preliminary planning and design work, would enable us to place long lead time orders, would encourage many manufacturers and contractors to make preparations and would give hope to some of the areas worst hit by unemployment. It is moreover a watershed decision—whichever way it goes it would be extremely costly to reverse".
It is astonishing that we are no further forward. We are no nearer getting a decision today than we were when the rail policy document was produced in March last year. So far, we have had the decision, which I welcome, for the go-ahead of the line to Norwich, the Anglia electrification. That decision was with the Government for over 18 months. As the Under-Secretary reminded us in Committee, that proposition slightly pre-dates the main electrification programme. It is not as though the electrification programme was first projected into the decision-making process in March 1981. In fact, the discussion began well before then. In May 1978 it was necessary for the then Secretary of State for Transport and the then chairman of the British Rail Board to appoint co-chairmen of a group with the following terms of reference:
To review the case for a programme of mainline electrification, to analyse the various relevant considerations and formulate the issues for discussion".
The review was carried out jointly by the Department of Transport and the British Rail Board, and the final report was published last year. The technicalities, finances, and the advantages were all considered in great detail. Indeed, the report makes it clear in paragraph 3:
We are satisfied that the work done, which was scrutinised in detail by both the Department of Transport and the Railways Board, gives results that are reliable; further refinement would not alter the conclusions to be drawn".
9 pm
Clearly, the Government's hesitancy in committing capital investment is holding up the decision. Everyone understands that major investments must be justified. No one is suggesting that the British Rail Board should simply ask the Government for X million pounds, that the Government should say "Yes" and that that should be the end of the matter. Of course such investment must be justified. On any test, electrification merits investment. It would reduce dependency on oil—the railways use 3 per cent. of the oil consumed by transport—it would assist the

United Kingdom's manufacturing industry in winning orders overseas in an expanding market and would be in keeping with the Government's policy of purchasing locally and more effectively to enhance the competitiveness of British industry.
A decision on electrification would raise morale in the industry and the standard of service. It is to everyone's advantage to proceed quickly, yet we are still wasting time. The Government are not coming clean. When the joint working group was set up, there was a clear understanding that when it reported on the general strategic principles—and if there was agreement between the Department and the board of British Rail—the board would not have to provide a line-by-line financial appraisal in justification. However, the Government have gone back on that and are demanding a line-by-line appraisal.
Paragraph 11(i) of the joint report states:
A programme of electrification would require commitments, from the supply industry and the workforce as well as railway management, which the ad hoc approval of individual projects could not command.
That is a clear sign that we should not proceed on an ad hoc basis. However, in June the then Secretary of State for Transport made the worst possible choice of those available to him. The report on electrification made it clear that the best course was to go for the largest and fastest programme, to be completed in 20 years. That is detailed in paragraph 13. At the other end of the scale, in paragraph 14, a programme was suggested that could be completed in 15 years. The report also suggested—as almost all reports do—a middle position of a medium-sized programme. The scale of the programme to be adopted depends on finance and the number of electrification teams available.
The previous Secretary of State seems to have totally ignored the three years' work that went into the report. In June, he said:
I am therefore inviting British Rail to prepare and submit a 10-year programme of schemes for electrification only of those potentially profitable main line routes where it is clear that the benefits could justify the investment. These should be presented together with the new commercial plans that are now required for the businesses. The approval of each successive electrifcation project will be conditional on the profitability of the investment in question and on the achievement of necessary improvements in productivity."—[Official Report, 22 June 1981; Vol. 7, c. 22.]
The then Secretary of State took the opposite view to that adopted by the report of the Department of Transport and British Rail. He went against the report and compounded his felony by insisting that the inter-city businesses should achieve full commercial performance by 1985. However, as the Minister knows, as a result of the recession—for which the Government are responsible—the public service obligation has had to be subtantially increased this year. I do not know how on earth those inter-city businesses can be expected to become commercially viable within the next three years. There is an urgent need for decisions and I cannot understand why the Government are delaying matters.
Paragraph 10 of the joint review of main line electrification refers to the importance of decisions. It states:
Such a strategic decision would give a base for the many individual decisions, for example, on the plans for designing new rolling stock, on renewing and modifying the track and signalling, on the disposition of depots, and on the traffic which the railways should aim to secure, all of which can be affected by the form of traction envisaged.


It is clear that the decision on electrification goes much wider than simply replacing stock.
Secondly, the British Rail document "Rail Policy, " says at paragraph 4.4:
The watershed year is 1983. If major expenditure on replacement is not started by then the inevitable consequence will be a rapid rundown of the whole railway system. We could postpone until that date, continuing with some replacement and with much 'make do and mend' at present investment levels, but not beyond. In 1981 we must have started the design and planning work and have placed orders for materials if major re-equipment is to commence in 1983—so the year for decision is 1981.
Yet here we are in 1982 with no major long-term decisions taken.
British Rail is in no doubt that if it is to achieve its main policy objective, the Government should approve its full electrification proposals as soon as possible. It is not as though the sums of money are unreasonable or beyond the Government's capacity to bear. As the Minister will know, from 1981 to 1991 British Rail estimates that £36 million per annum is required for electrification. In my view that is too modest a programme. It is a fraction of what we now spend on unemployment. That sum is about £13·5 billion, yet we cannot give British Rail £36 million a year to invest in electrification. We can and we must afford £36 million a year. However, all that we got from the Under-Secretary of State during a brief discussion in Committee was that proposals were put to British Rail in June and a reply is awaited.
That is not good enough. The Government must show a much greater sense of urgency and commitment. If there is widespread cynicism or low morale among British Rail staff today, the prime responsibility rests with the Government. If staff are resistant to change in work practices, that is due to the Government's insistence that they will release money only if British Rail sheds much of its work force. British Rail employees have heard that since the days of Dr. Beeching. The argument is that a more compact railway system and a smaller work force will mean more secure and better paid employees. That has not happened. We hear the same demands years later and the same promises from the Government. With over three million unemployed no one could blame railway staff if they were to say that enough is enough.
The only way in which we can begin to restore morale and to prove that railways have a future is to approve the electrification proposals soon and to commit the Government to further electrification projects. I cannot speak for any other hon. Member, but my constituents will not be satisfied if the east line electrification system terminates at Edinburgh.
I can best sum up the present position on electrification if I quote a leader in The Guardian of 23 June 1981, which said:
In the event, the statement made yesterday in the House by Mr. Howell, the Transport Minister, has turned out to be little more than an agreement in principle. British Rail will now be required to put up proposals again in a new form, after which the Government will decide case by case and electric line by electric line whether public investment is justified.
This leaves British Rail and the companies that would expect to do the electrification work in the worst of all possible positions. Major industrial decisions, like a motorway programme, or power station building, or railway electrification need a reasonable element of certainty over a period of several years if they are to have any chance of being completed with even modest efficiency.

The leader went on to say:
The unpublished No. 10 Think Tank's report on electrification and Professor Walters, the Prime Minister's economic adviser, are both reported to be highly critical of the assumptions on which the electrification proposals are based. But strategic industrial decisions cannot be made on the basis of short-term analysis. It is a grave weakness of our system that, in marked contrast, say, to France or Japan, we seem congenitally unable to set a long-term strategy and stick to it.
It is the Government's failure to have any long-term strategy that is condemning British Rail and undermining a system that is a vital part of our nation's infrastructure, and it is the Government's grave weakness that is contributing to the total collapse of British industry and preventing recovery.
A start can be made on electrification if only the Government will cease to be so obstinate in their adherence to monetarism. The need for electrification, the financial advantages to British Rail and the benefits to industry and the economy are amply demonstrated. It is time that the Government made a start, gave their commitment and approved at least the 10-year rolling programme for British Rail electrification.

Mr. Bob Cryer: I wish to speak briefly in support of both amendments but particularly in support of amendment No. 1, to which my hon. Friend the Member for Aberdeen, North (Mr. Robert Hughes) has just spoken. The idea of a 10-year rolling programme is excellent. It gives British Rail much greater certainty and allows it to plan. It also enables the workers of British Rail to see that the management can look ahead instead of living from hand to mouth as it is doing at the moment. It also removes the suspicion which has been engendered that British Rail management has been informed by the Government by means of a nod and a wink that to have increased investment for electrification it must achieve some significant "productivity" improvement. That, I believe, lies behind the present industrial conflict between British Rail and ASLEF.
It is remarkable how the board has plucked one from 19 productivity areas in front of the two sides for discussion and chosen to make an issue of it. There is no doubt that this sort of 10-year rolling programme is a possibility because the railway industry until the immediate present has had an excellent record of understanding and working together. That understanding is being destroyed by the attitude of the Government which is being inflicted on the management. I suspect that, in spite of its harsh words, the management has undertaken the task of attacking ASLEF with some reluctance, although its present attitude shows little sign of that.
The Minister must know that over the past 20 or 30 years there has been a marked increase in productivity by British Rail and a marked loss of jobs. If British Rail really wants to demonstrate an increase in productivity associated with the electrification programme, it must demonstrate to people who work for it that the money is forthcoming, for example, to replace all the unfitted goods wagons which still run around the British Rail network.
If electrification is to be introduced, that must involve higher running speeds, but the running speed on electrified or non-electrified railways is not governed by tractive effort when there are unfitted wagons. It is governed by the fact that wagons do not have continuous brakes, and that lack of a continuous braking system has existed since the 1830s and the development of the British railways


network. That sort of investment is vital if the benefits of electrification, with higher track speeds and therefore greater track capacity, are to be available to British Rail.
British Rail workers must know that the Government are prepared to invest that sort of money, not directly for electrification but for the consequences of it, arising from the claims for an increased track capacity. Yet that has simply not been forthcoming.
9.15 pm
British Rail cannot manage the upkeep of track, let alone embark on the replacement of unfitted goods wagons with those fitted with brakes which operate continuously, changing from the vacuum to the air-braking system which is more efficient. There must be a programme that it can look ahead to.
The Government have simply been using investment as a cats-paw to play with the railways and influence the board in trying to obtain the sort of conditions that are now wreaking great havoc on the railways. ASLEF is not prepared to make massive concessions after a unilateral decision of the British Railways Board to seek the destruction of the eight-hour day. The board unilaterally decided on that issue to put the travelling public to great inconvenience. ASLEF does not want to strike. The intransigence of the board occurred unfortunately because of the Government's attitude in laying down conditions for investment and that brought about the conflict.
This sort of rolling programme would give confidence to an ailing industry. From the 1955 modernisation programme, railwaymen have been told year after year to accept productivity improvements. The drivers accepted a guard in the rear cab and the removal of guards' vans. There are still guards' vans on trains because the Government have not provided sufficient investment to get rid of unfitted trains. They accepted alterations in working practices over many areas, saw the closure of thousands of miles of track and were told time and again to accept the conditions and then have a viable and confident industry which would maintain future jobs.
What has happened? In the past two and a half years particularly, the investment programme has been subject to a number of conditions. Electrification was first to be on a broad programme and then on individual routes which had to establish a criterion of profitability. Therefore, the board had to reassess all the schemes it had drawn up at the Government's request for a broad planning programme. The result is uncertainty which would be met, to some degree, by the amendment so that British Rail was given certainty over 10 years. The railwaymen have been told that BR's future is certain if they accept productivity demands, demanning and so on, but that has not been shown to be the case.
The Minister knows that the British Railways Board appears to be moving back to its old habits. I refer not to the industrial front but the closure front where it is proposing diversions of inter-city trains from the Settle to Carlisle line because the Ribblehead viaduct needs massive sums of money spent on it. Apparently, that has just been brought to its attention. Although that railway has been maintained since its opening in 1884, BR has suddenly discovered that a massive sum of money is required.
It is suggested that that is a means of closing that line by the back door. Although British Rail denies that, one knows that behind it the Government are holding tight to

the purse strings. We are not simply asking for a block grant to be handed over without any criteria, as happened with De Lorean in Northern Ireland. Some of us are critical on how that situation was handled. We simply ask for a sensible approach by the Government to encourage investment in much-needed areas of British Rail. There is no doubt that the money would be spent usefully. It would improve an important national asset, give confidence to railwaymen who lack it now, because of the criteria laid down, create more jobs and develop a technology that we could sell abroad. Britain is ahead of many other countries on railway technology.
In the 1960s some said that the railways should take second place in the queue. They argued that we should switch to motorways and to road haulage. Those arguments have not been borne out. Other countries are extending railway transport and we have been able to extend our exports of railway technology. There is potential for the future but that depends on the Government saying to British Rail "We shall give you the confidence that you need by supporting a 10-year programme." If the Government took that approach, I am sure that further developments in productivity talks would be possible.
The Government's harsh attitude has led to confrontation, and ASLEF is rightly taking the view that the British Railways Board has unilaterally and unjustifiably decided to adopt confrontation. That is not what ASLEF required. It was prepared to continue to discuss productivity and manning among the other items included in the list of 19 to which I referred earlier. Unfortunately the Government's attitude has been inflicted on a management that has been shown to be too supine.
I hope that the Minister will accept the amendment because I feel that it will give confidence and certainty to a network that we all wish—some perhaps academically—to support. In 20 or 30 years we shall probably be saying "We shall need the railways and we shall need them more than ever." If we do not give them the certainty of investment that they require, the present erosion will increase. About 10 years ago some of the bridges on the Settle-Carlisle line were raised when they were modernised for electrification. That is a sorry comment to make because electrification is hardly a possibility. The line seems to be facing a rundown. We shall very much regret any further rundowns. The railways need development and a buoyant future and the amendments seek to achieve that objective.

Mr. Holland: I too speak in support of the amendments introduced by my right hon. Friend the Member for Barrow-in-Furness (Mr. Booth), particularly that with regard to comparative long-term planning and electrification.
The importance of long-term investment planning, as opposed to short-term reaction to events, lies partly in two effects, one the direct benefits to the rail service in efficiency, in speed, in reliability, especially in the commercial goods sector, and also the indirect benefits to the rest of the economy, of which the Government do not appear to be aware.
If an investment programme were to proceed and were to proceed over a specified 10-year programme, several of our industrial producers which otherwise would be in difficulty would be able to benefit from the certainty of contractual arrangements to supply the electrification


programme. One is talking here of specific companies, of the GECs and the BICCs which have faced considerable difficulties in the heavy engineering area of their companies precisely because of the uncertainty that has been introduced by the current economic crisis for their long-term planning.
What the Government have not in general appreciated—it is typified by their attitude towards transport policy—is that short-term policies of demand management aiming, for example, to wring inflation out of the system, as they claim they are able to do by monetarist policies, do not cope with the underlying structural causes of an economic crisis, and do not cope with the difficulties for companies of undertaking investment where frequently this has to be paid off over not only a 10-year period but a 20-year period.
Large companies with long-term planning horizons cannot adjust either to the short-term demand management imperative of a passing monetarist Chancellor, nor even to the views given on a short-term demand management by a Government during a whole parliamentary lifetime. Forward planning of investment frequently involves five to seven years elapsing between a project being a gleam in the designer's eye and actually entering into production.
In the mid-1970s we found that a company such as GEC, which we were led to believe was opposed to planning agreement relationships with the previous Labour Administration, in effect was opening itself up to the prospect of a planning agreement precisely because the heavy electrical end of the company needed greater certainty of future sales to modernise and invest in equipment.
That is quite apart from the general external effect of an investment programme on the real economic side and on the financial side spanning more than the short term. For example, in the early 1960s it was commonplace, and taught almost without question in economic courses throughout the country, that the direct costs of running a public transport system did not measure the indirect benefits to society as a whole.
Those costs and benefits have to be evaluated and measured. If we are to run our railway system at a loss, as every major country is doing, and if we are to introduce some kind of rationale and justification for that loss, we need to be able to trace some of the indirect advantages to the economy from the direct loss registered in the system. That is directly relevant to the amendment and to the external borrowing requirements of British Rail.
In view of these arguments I do not accept that the House is in a position to evaluate the proper external benefits relating to the Bill without knowing what role the Government anticipate British Rail will play in the transport system and the economy as a whole. If we are unable to make forward estimates of, for example, the volume of freight that will be carried by British Rail, apart from inter-city passenger transport, no rational policy can be made for justifying a deficit in relation to the external advantages to other sectors of the economy or to society.
That is one of the limits of the Government's present approach. The Government appear to have ruled out any long term financial planning while at the same time insisting on what amounts to a Mafia type relationship with the British Railways Board and with the railway

unions—that is, unless they accept a reduction in variable costs in the short term, in effect wages, there will be no long-term investment programme.
But there are two ways of approaching the role of labour and of labour and the wage bill in running a transport service. One is, broadly, that adopted by the present Government, to undertake a policy against labour and the trade unions. The other is to involve labour and the trade unions in the forward planning over the 10-year period of the transport service itself.
That suggestion is hardly illusory. In other debates Ministers have frequently referred to the economic successes of some of our main competitors abroad, one of which is Japan. What seems to be lacking in the general monetarist reasoning of the Government, which is reflected in their attitude towards wage bargaining in the public transport sector, is that in an economy such as Japan's the workers are, in effect, guaranteed lifetime employment. Instead of the bludgeon of unemployment and redundancy designed in the short term to rationalise the structure, the work force is brought into the forward planning of the transport system. That is also the case in France where it relates both to the electrification programme and to the issue of a 10-year planning forecast. The French have a programme contract system, which is similar to the planning agreement system proposed by the Labour Party of which I am proud to be a member. The programme contract system sets long-term objectives for the role of transport in the French economy and society. It sets that role not behind closed doors but so that terms of reference of the debate and the prospects for the rail services in France are publicly debated and become a subject of public discussion. In France, for example, one can hear of the programme contract for—

Mr. Deputy Speaker: I am sorry to interrupt the hon. Gentleman, but he seems to be straying from discussing the amendment, which is concerned with the annual external financing limits for British Rail.

Mr. Holland: With due and unqualified respect, although I am subject to correction, I understand that this country happens to be a member of the EEC, that the EEC happens to have a transport policy and that transport policy is affected by what happens in the member States. The amendments relate to a 10-year financing programme, enabling direct projects such as electrification and indirect benefits to be registered.
This matter is directly relevant to the external borrowing of British Rail. Recently in this country we have seen two major confrontations on transport policy. The first is the case of London Transport and the second is the dispute with the Associated Society of Locomotive Engineers and Firemen.
In France, the transport of the equivalent capital city, Paris, is intimately integrated with the transport of the surrounding national railway network. I beg your tolerance, Mr. Deputy Speaker, to develop this point, which is concerned with finance and financial limits. Passengers in Paris are able to travel with one card on the equivalent of British Rail and London Transport. The subsidy undertaken by the French Government, not simply by Paris Transport, is equivalent to 85 per cent. of the total costs.
That cost has been introduced as a negotiated cost, merited to be borne by the national exchequer in view of


the estimated benefits in an efficient public transport system, which thereby reduces the necessity of carrying passengers or goods by road. The external financing requirement is made an open subject for public debate. One can hear about that debate by turning on the radio or reading about it in the newspapers and in the declarations made by the interested parties in the debate.
The contrast with the discussion that we are having here in the mother of parliaments on the external financing limits is staggering. The Government are coming forward with a figure that appears to be plucked from the air, made on their guesstimate of what the short-term situation may be rather than informing the House adequately what the direct and indirect benefits of such finance would be. The amendments are directly relevant in demanding that the country has a right to know the Government's perspective for both national and urban transport planning over at least a 10-year period.
I strongly recommend that, if they are unaware of this, Ministers should instruct their officials to inform them further on what happens in France. It would be of interest to many hon. Members if Ministers made a further statement about the external borrowing requirement and made a comparison with what happens in another EEC country, which at least has a rational approach to transport planning rather than the ad hoc and reactive groping in the dark that passes as a substitute for transport policy in the Government's approach.
The variable costs in planning cannot possibly be estimated with any accuracy over the medium term in relation to the real financial needs of any transport service—urban, such as London Transport, or national, such as British Rail—unless those who are concerned in the management of the enterprise have some idea of what they will be over the medium term. It is clear that no trade union would wish to commit itself indefinitely to a particular target rate or norm, irrespective of the rise in the cost of living and a possible decline in the standard of living.
It is consistent with Labour Party policy that trade unionists should be brought into the negotiation of planning agreements in the transport sector with, for example, British Rail, as with London Transport. Again, it is one of the features of democratic forward planning that I strongly recommend to the House. In that context, we would introduce a degree of rationality into the debate. There is no formula for automatically solving the problem. There are different interests, and there are bound to be conflicts of interest. But, instead of a short-term reactive position—where we are offered either some unemployment now or more unemployment in the future unless there are wage and manning reductions without any regard to improvements in investment in the service—it would enable the transport system in this country to be run in a framework that could be negotiated with the active participation of the labour force in the planning process itself, which would certainly benefit the public and the consumer.

Mr. Kenneth Clarke: One theme that unites all the speakers in the debate, and with which the Government wholly concur, is that most of us are looking towards the future of the railways and we all have certain common aims in view. Every hon. Member—and certainly the Government—believes that the long-term aim is to have a modern and efficient railway system, able to provide the

best possible service to the public at reasonable cost and able to play a leading part in the rational transport policy towards which it is possible for the country to go. Every hon. Member was united in that and I believe that, allowing for the fact that the hon. Member for Nuneaton (Mr. Huckfield) is obsessed with the short-term problem of acting as the spokesman for ASLEF in the current dispute, he—when he lifts his horizons a little higher—will be committed to the long-term future of a sound, healthy, modern and efficient railway system.
The Government's broad approach to the railways, which is highly relevant to the amendment and to the 10-year future referred to in it, is that it will require a commitment from all the parties involved to keep the railways healthy and serving their transport purpose. It will require a commitment from the British Railways Board and management to improving the business performance of the industry and achieving the highest management standards; a commitment from the trade unions and work force to reducing overmanning, improving productivity and helping to reduce the avoidable costs of the railway; and a commitment from the Government on a proper basis of financial support and essential investment in the railway system, matching its needs with the need to assure value for money for the public.
It is the Government's view that those commitments need to be honoured by all three parties if we are to have a modern railway system. We should synchronise our progress on those three fronts to the extent that British Rail improves its business performance, the trade unions improve productivity and working practices, and the Government honour their commitment on financial support and investment.
Despite the difficulties under which everyone is labouring, there has been some worthwhile progress in the last few years. British Rail is, of course, operating under difficult constraints and against a background of a serious recession. So, too, are many private industries, but I appreciate that the railways are acting under financial constraints and that times have not been easy over the last two years.
Trade unions must face up to the need to change long cherished practices and manning arrangements. They have made good progress over the last 12 months. British. Rail has made progress on productivity and all trades unions involved will have to accept eventually that steam engine practices have no part in the modern railway of the future. The Government have honoured their commitment of financial support, again against a difficult background of an economic recession and severe restraints on the public purse.
I should like to deal with the main thrust of the amendment so far as I can understand it. It is based apparently on the belief that the railways are starved of finance and that they have an uncertain financial future. It can be demonstrated, I believe, that, despite the difficulties of the last two years, the Government have dealt with the railways generously and fairly. It is mythology that financial constraints over the last two years have been tighter than those that the railways previously suffered. References to monetarism are mere use of a shibboleth introduced into debates on all subjects Despite the financial constraints, the railways have been treated generously. It is not true that they have been, or that they are likely to be, deprived of the money that they need to


run a modern railway if, for their part, they can improve business performance, raise productivity and make their contribution to dealing with the problems.
I should like to refer to the main control that all Governments have exercised over nationalised industries, including British Rail—the overall control of the external financing limit on the total level of public sector borrowing and grants. The Government did not invent this system. The Labour Government also exercised it. I do not believe that any responsible Government will be able to abandon all controls on the external borrowing requirements of a major nationalised industry.
In looking 10 years ahead, one has also to look back to the last two years. Under this Government, the external financing limit has been adjusted in each of the last two years in order to compensate the railways for sudden and unexpected falls in traffic that they suffered because of the economic recession. In September 1980, the external financing limit then set by the Government was raised by £40 million to £790 million to compensate the railways for the first losses of traffic they suffered, particularly in freight business. In the last year, the Government adjusted the external financing limit from £867 million to £920 million, again to compensate the railways for the loss of revenue that they were suffering because of the recession.
Having set external financing limits, the Government adjusted them in each of the last two years precisely because we accepted the need for adjustment as revenues had been lost for reasons outside the railways' immediate ability to adjust costs downwards to compensate for what had happened. We have been flexible in compensating for the unavoidable cost of the recession. Apart from the adjustment of the external financing limit in each of the last two years, the overall level of the EFL also compares favourably with the external financing limit imposed on British Rail by the previous Government. There has been an easing of financial constraints under this Government.
I should like to give comparative figures expressed in real terms allowing for inflation. At average 1981 prices, the EFL for 1977–78 was £687 million, for 1978–79, £785 million, for 1979–80, £743 million, for 1980–81, £847 million, for 1981–82, £895 million and for 1982–83, £848 million.
The hon. Member for Nuneaton claimed to detect a cut in the figures for the last two years. I have already stated that last year's EFL was raised from £867 million to £920 million because of lost revenue during the year when British Rail was unable to cut costs as rapidly as was necessary to compensate. Next year, the figure we have set—I now move to current prices—is £950 million which is roughly the same, allowing for inflation, as the figure set for last year. There is no cut at all. It is 9·5 per cent. above the EFL for last year. The hon. Gentleman is wrong to say that there has been a cut.

Mr. Les Huckfield: I am grateful to the Minister. It depends which price one uses as to which figure comes out. Is the hon. and learned Gentleman saying that in all those cases he excludes the specific allocation for the closure of collection and delivery services? Or is that included in the figures?

Mr. Clarke: The figures include that. Last year we made a special provision towards the cost of the closure of the collection and delivery of parcels service. That was

not, in the event, required by British Rail. The increase from £867 million to £920 million last year was for the purpose of compensating for loss of revenue. The railways did not need the sum provisionally allocated to them for the closure of the collection and delivery of parcels service.
9.45 pm
The hon. Member for Nuneaton said that it depends on the price base used. That is why I was specific throughout. I realise the figures that I have put on the record are complicated; they require study. I heard the hon. Gentleman today earlier splitting hairs in an ingenious way on behalf of ASLEF to get it out of its broken understandings that have caused the present dispute. I am not going to accept what he says. I shall draw the general conclusions that I insist can be drawn from any anlysis of the external finance limit figures for the last two years.
The limits are higher in real terms under this Government than under the last Government; they have been adjusted by the Government because we accept that special, unexpected problems have hit the railways because of the recession. It is mythology to claim that the external finance limits have been squeezed vicelike on the railways to deprive them of finance. At a time of overall crisis and reduction of external finance limits for nationalised industries as a whole quite rightly, whilst I am defending the decisions we take—I am not criticising them—we have been generous to British Rail and eased, so far as was practicable and consistent with our duty to the taxpayer, the constraints it has been under at a time of difficult recession.

Mr. Robert Hughes: Would the hon. and learned Gentleman answer this question? He made the case that the external financing limit has been increased over the last couple of years to take account of the loss of revenue because of the recession. What about the part of the external financing limit that is available for investment? How much has that been increased? It is not a question simply of extending the external financing limit to suit conditions. It is the real money available for investment that counts.

Mr. Clarke: I shall come to the investment ceiling last. I would like to deal with another matter that has been raised and which is relevant to finances—the public service obligation for the passenger services. That bears on many of the points made, particularly by the hon. Member for Vauxhall (Mr. Holland), about the fact that many passenger railways throughout the world are run at a loss.
The Government accept that a great part of the noncommercial railway, including rural lines and the commuter lines in London, are not under any commercial remit and require a realistic level of subsidy from the taxpayer because there are broader reasons for supporting them than just the narrow commercial return from those lines. Again, the public service obligation paid to the railways has been increased by the Government. It was recently raised—I think the announcement was on the occasion of the Second Reading of the Bill—in mid-year for the first time since the system was introduced in response to European Community regulations in the early 1970s. The Government raised the public service obligation by £110 million in one fell swoop to £755 million for 1981.
I shall not bore the House with more comparative figures. I shall merely say—and it can be checked—that this is by far the highest ever public service obligation payment in real terms that British Rail has received. What it amounts to is that the Government are paying over £2 million each day in subsidy for the passenger services of British Rail. That is not an ungenerous amount. Not only is it the highest ever, but it shows our support for the railways.
Going on to investment the right hon. Member for Barrow-in-Furness (Mr. Booth) objected to the first point he knows I always make but it remains a valid point and I am still at a loss to know what his answer to it is. The only cash ceiling on investment that successive Governments have imposed is the so-called investment ceiling. In 1981–82 that works out at the staggering sum of £427 million at outturn prices, which in real terms is exactly the same investment ceiling as that imposed on the board by previous Governments, including our immediate predecessor.
It is true that the business performance of the railways is such that they are being squeezed within their external finance limit by the business losses that they are making on freight in particular, on inter-city and on their noncommercial railway business, and that they are having difficulty in investing up to that investment ceiling within the terms of the external finance limit.
I have already described what the Government have done to expand that external financing limit. We have been flexible on it to compensate particularly for unexpected losses of revenue, for which it is impossible to cut costs in time. We do not compensate British Rail for unexpected increases in cost, which it is its management duty to restrain and which it is trying to restrain, although unfortunately its costs continue to rise steadily on its intercity business.
It is certainly not the Government's business to start extending the external financing limit to finance pay settlements in a way that was urged upon us by the hon. Member for Nuneaton. We have responded by easing some of the financial constraints on British Rail. We should like to see it invest up to the levels required. If the business performance can be improved and the losses contained, if less can be drained away, if losses on freight and inter-city can be reduced, and if the performance even of the non-commercial services can be improved, the more able British Rail will be to invest up to its investment ceiling within its present external financing limits.
That is true of any business. It is not unique to the nationalised industries. Any industry that goes through trading difficulties needs a generous bank manager, which British Rail has in the form of the Government. Secondly, there is a limit to the extent to which it can continue to do various things, such as investing to the level that it would like, until it can reduce its losses and improve its business performance. Like any other business, British Rail has a duty to generate some of the sums that it needs for investment out of its own resources.

Mr. Stuart Holland: The Minister said that his argument bore no relation to monetarism. He is apparently unaware that he has just given the classic monetarist argument: run a public service despite the externalities, despite the impact on the rest of the economy, as one runs a private firm; run it in a recession by cutting back. It is precisely that which is dragging this country down an

almost bottomless pit of monetarism. The case for electrifying the railways is precisely that it would stimulate industry as well as improve the service.

Mr. Clarke: I know of no private business that can have a subsidy of £2 million a day to run its socially necessary services in London, including the area represented by the hon. Gentleman, as well as in the rural parts of the country. I know of no private business in the financial state that British Rail is in that could have had the easing of its financial constraints in the past 12 months that I have described. It is because the Government realise that there are long-term transport needs that we wish to see the railways go towards the future that I have described, and that is why we have eased the constraints in the way that we have.
The hon. Gentleman cannot argue that we should go all the way in the other direction. If we suspend or relieve some of the financial constraints that would otherwise fall on British Rail, because we believe that there is a general public benefit, the hon. Gentleman cannot interpret that to mean that we should abandon all financial discipline, that the cost is no object and that £2 million a day is not enough, that investment should not be appraised and that investment ceilings should be exceeded. The hon. Gentleman cannot interpret it to mean that the external financing limit should be lifted to such a level that it can accommodate the necessary investment demanded by British Rail, the services and the kind of attitudes expounded by the hon. Member for Nuneaton, which is "Incidentally, we also want the pay increases, without being able to deliver the productivity that we promised last August."

Mr. Les Huckfield: The Minister keeps referring to pay increases. It is not pay increases that I am asking for or that ASLEF is asking for, particularly. It is pay increases as recommended by the Railway Staff National Tribunal, which includes a British Railways Board member as an assessor. In other words, the board's own contribution has been made to that arbitration. That is who is saying "Give them the increase", not I.

Mr. Clarke: The approach to the pay increases over and above the 8 per cent. that everybody received last year, the increases that should apply in the future and matters such as the 39-hour week and the extra 3 per cent. is that they should be paid for by improved productivity so far as possible. That was the understanding of British Rail, of the National Union of Railwaymen and of the Transport Salaried Staffs Association. It was the understanding that ASLEF left everybody else thinking it had reached, but on which it is now attempting to renege.

Several Hon. Members: rose—

Mr. Deputy Speaker: Order. We must not go too far down that line.

Mr. Clarke: It was with order in mind that I was proposing to progress a little further on the finances and withdraw from the current dispute. I apologise to the hon. Gentleman. We shall lead each other astray again outside the terms of order and of this debate and into the current dispute, which we should not do.
A great deal has been said this evening and throughout our Committee proceedings about the effect of the supposed excessive constraints that our present arrangements—the EFL, the PSO and the investment


ceiling—are imposing on maintenance, renewal and investment in the British Rail system. Many of the arguments do not appreciate that much of the maintenance and renewal of the network does not count as investment at all. Certainly the arguments about investment ceilings and so on do not bear on track renewal and signalling maintenance, which matter so much to keeping a modern railway and stopping the service declining.
In 1981 alone about £500 million was spent on those items. They are not at the moment being excessively confined. It is also not always appreciated that by no means all the investment of British Rail is financed by borrowing. Half the point of the amendments that are being tabled to the Bill is that it is believed that the borrowing ceilings are in some way directly related to the level of investment, whereas a lot of the investment is supported by grant. That bears on fears about the Settle—Carlisle line and so on.
Investment in the non-commercial railway is covered by the public service obligation grant that we already give. Again, there is no question of our imposing monetarist, artificial financial rules on the investment in the noncommercial railway. The public service obligation grant contains an element known as the replacement allowance for the renewal of assets in the non-commercial railway business. That, again, amounted to no less than £80·3 million in 1981. That reduces the railways' need to borrow.
I shall not enter into the details of the Ribblehead viaduct with my hon. Friend the Member for Christchurch and Lymington (Mr. Adley) and the hon. Member for Keighley (Mr. Cryer). They are partly concerned because of the great railway history of the line. I believe, as British Rail has assured us, that the decision to switch inter-city traffic from there has nothing to do with the condition of the viaduct. It is—as British Rail has made clear publicly—because it believes that it will improve the return on the inter-city services by taking them by Manchester and the alternative route.
In so far as there is a need to maintain the Ribblehead viaduct, the need to maintain the investment, structures and so on is entirely covered by the enormous public service obligation grant that we give to British Rail—£755 million, or £2 million a day. Within that British Rail has to finance the non-commercial services that we oblige it to run.

Mr. Stuart Holland: The Minister cannot have it both ways. On the one hand, he is saying that the Government are paying out on what amount to cost benefit terms. On the other hand, he is saying that the industry must cut back and be run like a commercial operation. This is the basic premise of the monetarist reasoning. Would he care to answer the points that I was making—for example, concerning the benefits that electrification would have on the private sector, because there is no public enterprise supplying the electrification equipment? In practice, that will mean that 100 per cent. of all public expenditure in that sector would go straight to the private sector.

Mr. Clarke: What I have just said applies to the noncommercial railway. Successive Governments—the Labour Government as well as our own—have accepted that inter-city and freight should be commercial businesses and should achieve agreed business performances and commercial targets over a period of time. Of course, we accept that in a time of recession it has proved more difficult for British Rail to attain those commercial targets. Nevertheless, for the commercial railway different rules have always operated.
Successive Governments have set commercial targets for British Rail. I have explained that the public service obligation covers the non-commercial railway. We do not take a commercial view of the commuter and rural services and the essential social links. But we are following the same policy as our predecessors on the commercial railway. We have eased the financial restraints on them and thereby given them more time, because of the difficulties that they are having in coming through the recession. But the commercial railway will eventually achieve health only if it can improve its business performance and productivity and thereby get the investment that we are all talking about.
Perhaps that would be a convenient time, therefore, to turn to electrification and the points made by the hon. Member for Aberdeen, North (Mr. Hughes).

It being Ten o'clock, the debate stood adjourned.

BUSINESS OF THE HOUSE

Ordered, 
That at this day's sitting, the Transport (Finance) Bill may be proceeded with, though opposed, until any hour.—[Mr. David Hunt.]

Transport (Finance Bill)

Question again proposed.

Mr. Clarke: I apologise to the hon. Member for Aberdeen, North for not sending him the two letters to which he referred. I recall working on drafts of them, so I apologise for what must be a complete breakdown in the system. It will be remedied immediately.
The substantial point about which the hon. Gentleman was concerned this evening was the question of electrification. I can only reiterate what I said last time. Contrary to belief in the railway community, the Government have not changed their position and nor has their commitment to the principle of a 10-year programme of electrification changed since the announcement was made last June.
This evening we touched again on the arguments about whether the announcement of my right hon. Friend the then Secretary of State in June last year involved a shift away from the programme considered earlier in the year. A joint study was undertaken and the results published by the Government on work carried out in our Department and by British Rail. The report has been quoted this evening. The estimates in it were based on estimated performance by the commercial railway—inter-city and freight—which already, by the time that the report appeared, the railway was not achieving in practice.
The Government were under a duty to the taxpayer to review the document. In June we nevertheless made a statement that accepted the principle of a 10-year programme of electrification of potentially profitable main line routes. Therefore, our policy declared in June and adhered to now accepts the points made by the hon. Members for Keighley and for Vauxhall about the need to take a continuous and developing view of a major investment project.
We accept the principle of a programme of electrification for potentially profitable main line routes. Because we were talking about potentially profitable main line routes on what are commercial businesses—inter-city and freight—we asked for new business plans to be produced for inter-city and freight. We also asked for a programme setting out the particular routes and indicating their order of priority based on their profitability. We also said that we expected to see progress on productivity and that we determined investment decisions on electrification in line with progress on productivity.
We did not set unreal targets. We took the targets for productivity that we indicated out of the board's corporate plan and what it hoped to achieve over the next five years by reductions in overmanning. Since that time the Government have been as disappointed as British Rail. We have not reached a stage where we have all the ingredients we asked for when we set out the policy in June.
It does not help to get bogged down in nit-picking arguments about who owes who a letter or whose fault the delay is. I can update matters a little from the Second Reading debate. We have now received the business plan for inter-city. We expect to receive the business plan for freight shortly. We still have not received the 10-year programme for electrification of routes, so we are in no position to assess the first routes. We expect British Rail's chosen first priority to be the east coast main line, but British Rail and the Government are anxious to make progress. We hope soon to have all the documents for the Government to take decisions.
The background remains the question of progress and productivity. As I said, this has been reasonably good over the past year. The agreements last August were particularly encouraging, although they are by no means the whole process that has to be gone through to achieve a modern railway. If British Rail continues to make progress on productivity it will be much easier for us to consider the programmes put up for investment. In the interests of the taxpayer and the cost benefit analysis that has to be done on all major investment we could not start to consider making rapid progress on new investment projects if, for some reason, all productivity progress is halted because of a belief in sacrosanct but out-of-date productivity agreements.
The Government have not been inflexible. We had an application before us that predated the main electrification studies—the East Anglian main line proposal was awaiting a decision. My right hon. Friend repeatedly had to explain that we could not divorce a decision on the East Anglian plan from the overall business performance of the railway, progress on productivity, and other advances.
Nevertheless, on 22 December 1981 the Government were able to say that the business performance was understandable in the light of the recession, that progress on productivity was being made—the NUR had just honoured the productivity agreement entered into by all three unions in August 1981—and that we approved the electrification to Norwich and Harwich.

Mr. Robert Hughes: Three years' hard work was done by British transport and British Rail on electrification. The study on electrification and profitability spoke of 11 per cent. financial returns. It looked at productivity and all the aspects mentioned by the hon. and learned Gentleman tonight. The Labour Party finds it difficult to understand what new proposals are now affecting the Government's decision. They seem to be injecting some new productivity proposals into the discussions on the basis of the decision. If that is what the hon. and learned Gentleman is saying, it sets aside the whole of that study on electrification. I cannot understand why the hon. and learned Gentleman has gone back to the board and why we are discussing virtually a new set of proposals.
Will the hon. and learned Gentleman make it clear that, when he is speaking about productivity, he is speaking about productivity and not demanning? What has soured the relations in the railways industry is the equation of productivity with demanning, and that is a prostitution of productivity agreements.

Mr. Clarke: I am not saying that anything is to be set aside. The policy is building on the electrification study that was carried out. The study was carried out at a time when the Government were agreeing financial targets for inter-city and freight, based on expectations of improving business performance. The economic analysis of electrification in the study made assumptions about improving performance of inter-city and freight.
Unfortunately, by early 1981 it was obvious to everybody that the business performance of British Rail no longer matched those expectations. It was getting into difficulties and the time had come to look into the business to decide what the business prospects now were and also, as British Rail had been trying to do, to get down costs, adjust services and demand and bring back a sound business basis for the railways.
It was in the light of the changed circumstances that the Government asked for the new business plans for inter-city and freight. At the same time, we committed ourselves to the 10-year programme. We rapidly agreed with British Rail on the methodology on which to assess individual projects. We also said that productivity had to play a part.
I agree that productivity does not simply mean demanning. In an overmanned industry there is some room for reduction in manning. There have been spectacular reductions in the past in manning in the railways. Those reductions, and improvements in productivity, came to a halt for a long time in the 1970s. There have been welcome advances in the past 12 months. With continued commitment by the railway community, I am sure that advances will continue and the public and the Government will be given faith in a long-term railway system that justifies investment.
There has been much talk of the next 10 years, but I suggest that the amendments are impracticable. No Government can forecast the external financing limits for the next 10 years. The previous Government did not try to and neither will this Government. An external financing limit depends on a whole range of variables—training, climate, business performance and other factors. It is unreal to plan for 10 years.
The second amendment links borrowing to electrification. I have already explained that not all investment comes out of borrowing, although I was largely talking about the non-commercial railways. The need for British Rail's borrowing is not confined to investment. It has to borrow for many other purposes. It is impossible to earmark a particular sum out of the overall borrowing of British Rail for any particular investment project. Thus, neither of the amendments is practicable or necessary.
The House asked us to take a longer-term view of the financial problems and constraints on the railways. We propose to do that in the review of British Rail finances which my right hon. Friend the Secretary of State has already announced and which he is anxious to set up. That review was suggested by Sir Peter Parker and the board. It is quite wrong to say that it is another Beeching review. In fact, it has been generally welcomed by most people in the railway community and by the Government. The Government accept the need for a review of British Rail finances and policy objectives, which will include looking at the prospects of improving the business performance of the railways. We hope that we shall soon give details of the terms of reference and composition of the review.
The Government are not taking a short-term view. We are not running away from the necessity to keep looking at the policy objectives and financial constraints. We propose to set up the review to assist ourselves and British Rail to study them. The background is not one of tightening financial constraint or of meanness; it is a response to the problems of recession. The Government have given their response, and we expect a response from the management and trade unions. If everyone were to honour their agreements and look to the long-term future of a modern railway, and stopped retreating into the past—1919, the day when railways were dominated by steam engines—we should all make better progress.
I therefore ask the House to reject the amendment on the basis that there is a better way of getting the kind of future that we want for the railways.

Question put, That the amendment be made:-

The House divided: Ayes 62, Noes 108.

Division No. 49]
[4.05 pm


AYES


Alton, David
Penhaligon, David


Ashton, Joe
Ross, Stephen (Isle of Wight)


Callaghan, Jim (Midd't'n &amp; P)
Sandelson, Neville


Ford, Ben
Steel, Rt Hon David


Freud, Clement
Wainwright, R.(ColneV)


Grimond, Rt Hon J.



Hawksley, Warren
Tellers for the Ayes:


Janner, HonGreville
Mr. A. J. Beith and


Johnston, Russell(Inverness)
Mr. William Pitt.


McNally.Thomas



NOES


Adley, Robert
Canavan, Dennis


Aitken, Jonathan
Carlisle, John (Luton West)


Alexander, Richard
Carlisle, Kenneth (Lincoln)


Alison, RtHonMichael
Carter-Jones, Lewis


Allaun, Frank
Channon, Rt. Hon. Paul


Ancram, Michael
Chapman, Sydney


Archer, Rt Hon Peter
Clark, Hon A. (Plym'th, S'n)


Aspinwall, Jack
Clark, Dr David (S Shields)


Atkins, Robert(PrestonN)
Clark, Sir W.(Croydon S)


Barnett, Guy (Greenwich)
Clarke, Kenneth (Rushcliffe)


Beaumont-Dark, Anthony
Clegg, Sir Walter


Bennett, Andrew(St'kp'tN)
Cockeram, Eric


Benyon, W. (Buckingham)
Cocks, Rt Hon M. (B'stol S)


Berry, HonAnthony
Cope, John


Best, Keith
Corrie, John


Bevan, David Gilroy
Cranborne, Viscount


Biggs-Davison, SirJohn
Cryer, Bob


Blackburn, John
Cunliffe, Lawrence


Blaker, Peter
Cunningham, G.(lslingtonS)


Booth, RtHonAlbert
Cunningham, DrJ.(W'h'n)


Boothroyd, MissBetty
Davis, Terry (B'ham, Stechf'd)


Boscawen, HonRobert
Dean, Joseph (Leeds West)


Bottomley, Peter(W'wich W)
Dewar, Donald


Boyson, DrRhodes
Dixon, Donald


Brooke, Hon Peter
Dobson, Frank


Brotherton, Michael
Dormand, Jack


Brown, Michael(Brigg&amp;Sc'n)
Douglas-Hamilton, LordJ.


Brown, R. C. (N'castle W)
Dubs, Alfred


Browrne, John(Winchester)
Dunwoody, Hon Mrs G.


Bryan, SirPaul
Eadie, Alex


Buck, Antony
Elliott, SirWilliam


Budgen, Nick
Emery, Sir Peter


Campbell-Savours, Dale
English, Michael






Ennals, Rt Hon David
Hunt, David (Wirral)


Evans, loan (Aberdare)
Jenkin, RtHon Patrick


Evans, John (Newton)
John, Brynmor


Ewing, Harry
Johnson, James (Hull West)


Eyre, Reginald
JohnsonSmith, Geoffrey


Fairgrieve, SirRussell
Jones, Barry (East Flint)


Farr, John
Jopling, RtHon Michael


Faulds, Andrew
Kaufman, RtHon Gerald


Fenner, Mrs Peggy
Kerr, Russell


Finsberg, Geoffrey
Kershaw, SirAnthony


Fisher, SirNigel
Kilroy-Silk, Robert


Fitt, Gerard
King, RtHon Tom


Flannery, Martin
Lamond, James


Fletcher, A. (Ed'nb'ghN)
Lang, Ian


Fookes, Miss Janet
Leighton, Ronald


Forrester, John
LeMarchant, Spencer


Foster, Derek
Lennox-Boyd, HonMark


Fowler, Rt Hon Norman
Lestor, MissJoan


Fox, Marcus
Lewis, Arthur (N'ham NW)


Gardiner, George (Reigate)
Lewis, Ron (Carlisle)


Garel-Jones, Tristan
Litherland, Robert


Garrett, John (NorwichS)
Lofthouse, Geoffrey


Glyn, Dr Alan
Luce, Richard


Golding, John
McCartney, Hugh


Goodhew, SirVictor
McCrindle, Robert


Goodlad, Alastair
McDonald, DrOonagh


Gow, Ian
Macfarlane, Neil


Graham, Ted
McKay, Allen (Penistone)


Grant, George (Morpeth)
MacKay, John (Argyll)


Greenway, Harry
McNamara, Kevin


Gummer, JohnSelwyn
McQuarrie, Albert


Hamilton, James (Bothwell)
Marks, Kenneth


Hamilton, Michael (Salisbury)
Marlow. Antony


Hampson, DrKeith
Marshall, D(G'gowS'ton)


Harrison, RtHon Walter
Marshall, DrEdmund (Goole)


Havers, Rt Hon Sir Michael
Marten, RtHon Neil


Hayhoe, Barney
Martin, M(G'gowS'burn)


Haynes, Frank
Maxwell-Hyslop, Robin


Heffer, Eric S.
Mayhew, Patrick


Henderson, Barry
Maynard, Miss Joan


Hogg, N. (EDunb't'nshire)
Meacher, Michael


Holland, Philip (Carlton)
Miller, Hal(B'grove)


Holland, S.(L'b'th, Vauxh'll)
Mills, lain(Meriden)


HomeRobertson, John
Miscampbell, Norman


Hoyle, Douglas
Mitchell, David(Basingstoke)


Huckfield, Les
Mitchell, R.C. (Soton Itchen)


Hughes, Mark (Durham)
Molyneaux, James


Hughes, Robert (Aberdeen N)
Monro, SirHector


Hughes, Roy (Newport)
Morris, Rt Hon A. (W'shawe)




Morrison, Hon C. (Devizes)
Sims, Roger


Morrison, Hon P. (Chester)
Skinner, Dennis


Morton, George
Snape, Peter


Murphy, Christopher
Spearing, Nigel


Neale, Gerrard
Speed, Keith


Needham, Richard
Spence, John


Nelson, Anthony
Stanbrook, Ivor


Neubert, Michael
Stanley, John


Newens, Stanley
Steen, Anthony


Newton, Tony
Stewart, A. (ERenfrewshire)


Nott, Rt Hon John
Stewart, Rt Hon D. (W Isles)


Ogden, Eric
Stewart, Ian (Hitchin)


Onslow, Cranley
Stokes, John


Oppenheim, Rt Hon Mrs S.
Stott, Roger


Orme, Rt Hon Stanley
Stradling Thomas, J.


Palmer, Arthur
Straw, Jack


Park, George
Summerskill, HonDrShirley


Parker, John
Tapsell, Peter


Pattie, Geoffrey
Taylor, Mrs Ann (Bolton W)


Percival, Sir lan
Thomas, Rt Hon Peter


Prentice, Rt Hon Reg
Thompson, Donald


Price, C. (Lewisham W)
Thorne, Stan (Preston South)


Proctor, K. Harvey
Thornton, Malcolm


Pym, Rt Hon Francis
Torney, Tom


Radice, Giles
Townsend, Cyril D, (B'heath)


Raison, Timothy
Trippier, David


Rathbone, Tim
Trotter, Neville


Rees-Davies, W. R.
Varley, Rt Hon Eric G.


Rhodes James, Robert
Viggers, Peter


Ridley, HonNicholas
Wakeham, John


Rifkind, Malcolm
Waldeg rave, HonWilliam


Roberts, Albert (Normanton)
Ward, John


Roberts, Ernest (Hackney N)
Wells.John (Maidstone)


Roberts, Wyn (Conway)
Welsh, Michael


Ross, Ernest (Dundee West)
White, Frank R.


Sainsbury.HonTimothy
Wilkinson, John


St. John-Stevas, Rt Hon N.
Wilson, Gordon (DundeeE)


Scott, Nicholas
Winterton, Nicholas


Sever, John
Wolfson, Mark


Shaw, Giles (Pudsey)
Woolmer, Kenneth


Shaw, Michael (Scarborough)
Young, David (BoltonE)


Sheerman, Barry
Young, SirGeorge (Acton)


Sheldon, Rt Hon R.



Shelton, William (Streatham)
Tellers for the Noes:


Silkin, Rt Hon J. (Deptford)
Mr. Frank Hooley and


Silvester, Fred
Mr. David Stoddart.

Division No. 50]
[10.12 pm


AYES


Allaun, Frank
Hughes, Robert(Aberdeen N)


Alton, David
Jones, Dan(Burnley)


Atkinson, N.(H'gey)
Leighton, Ronald


Beith, A.J.
Lewis, Arthur(N'ham NW)


Bennett, Andrew(St'kp'tN)
Lewis, Ron(Carlisle)


Booth, RtHon Albert
Litherland, Robert


Callaghan, Jim(Midd't'n &amp;P)
McElhone, Frank


Campbell-Savours, Dale
McKay, Allen(Penistone)


Clark, Dr David (S Shields)
Marks, Kenneth


Cocks, Rt Hon M. (B'stol S)
Marshall, D(G'gowS'ton)


Concannon, Rt Hon J. D.
Morton, George


Cook, Robin F.
Palmer, Arthur


Cryer, Bob
Penhaligon, David


Cunliffe, Lawrence
Powell, Raymond(Ogmore)


Cunningham, DrJ.(W'h'n)
Prescott, John


Dalyell, Tam
Robertson, George


Davidson, Arthur
Ross, Stephen (Isle of Wight)


Davis, Terry (B'ham, Stechf'd)
Skinner, Dennis


Dewar, Donald
Smith, Cyril(Rochdale)


Dixon, Donald
Snape, Peter


Dobson, Frank
Steel, Rt Hon David


Dormand. Jack
Stoddart, David


Evans, John (Newton)
Stott, Roger


Grimond, Rt Hon J.
Wainwright, E.(Dearne V)


Hamilton, James(Bothwell)
Walker, Rt Hon H.(D'caster)


Hamilton, W. W. (C'tral Fife)
Welsh, Michael


Harrison, Rt Hon Walter
White, Frank R.


Haynes, Frank
Whitlock, William


Holland, S.(L'b'th, Vauxh'll)
Woolmer, Kenneth


HomeRobertson, John



Hooley, Frank
Tellers for the Ayes:


Howells, Geraint
Mr. James Tinn and


Huckfield, Les
Mr. Hugh McCartney.


NOES


Alexander, Richard
Hamilton, HonA.


Ancram, Michael
Hawksley, Warren


Aspinwall, Jack
Hogg, HonDouglas(Gr'th'm)


Baker, Nicholas (N Dorset)
Holland, Philip(Carlton)


Beaumont-Dark, Anthony
Howell, Rt Hon D. (G'ldf'd)


Benyon, W.(Buckingham)
Hunt, John(Ravensbourne)


Berry, HonAnthony
Jopling, RtHonMichael


Biggs-Davison, SirJohn
Lang, Ian


Blackburn, John
LeMarchant, Spencer


Boscawen, HonRobert
Lester, Jim (Beeston)


Boyson, Dr Rhodes
Lyell, Nicholas


Bright, Graham
Macfarlane, Neil


Brinton, Tim
MacGregor, John


Brooke, Hon Peter
MacKay, John(Argyll)


Brown, Michael(Brigg&amp;Sc'n)
McNair-Wilson, M.(N'bury)


Bruce-Gardyne, John
Major, John


Budgen, Nick
Marlow, Antony


Cadbury, Jocelyn
Marshall, Michael(Arundel)


Carlisle, John (Luton West)
Mates, Michael


Carlisle, Kenneth(Lincoln)
Maude, Rt Hon Sir Angus


Chapman, Sydney
Maxwell-Hyslop, Robin


Churchill, W.S.
Mayhew, Patrick


Clark, Hon A. (Plym'th, S'n)
Mellor, David


Clarke, Kenneth(Rushcliffe)
Meyer, Sir Anthony


Cockeram, Eric
Mills, lain (Meriden)


Cope, John
Mitchell, David(Basingstoke)


Cranborne, Viscount
Molyneaux, James


Dean, Paul (North Somerset)
Murphy, Christopher


Douglas-Hamilton, LordJ.
Myles, David


Dykes, Hugh
Neale, Gerrard


Elliott, SirWilliam
Nelson, Anthony


Faith, Mrs Sheila
Newton, Tony


Fenner, Mrs Peggy
Onslow, Cranley


Fletcher-Cooke, SirCharles
Parris, Matthew


Garel-Jones, Tristan
Pattie, Geoffrey


Goodhew, SirVictor
Pawsey, James


Goodlad, Alastair
Percival, Sir lan


Gorst, John
Proctor, K. Harvey


Greenway, Harry
Rathbone, Tim


Griffiths, PeterPortsm'thN)
Renton, Tim






Rhys Williams, Sir Brandon
Stevens, Martin


Roberts, M. (Cardiff NW)
Stradling Thomas, J.


Rossi, Hugh
Taylor, Teddy (S'end E)


Shaw, Giles (Pudsey)
Tebbit, Rt Hon Norman


Silvester, Fred
Thomas, Rt Hon Peter


Speller, Tony
Thompson, Donald


Spicer, Jim (West Dorset)
Thorne, Neil (llfordSouth)


Squire, Robin
Thornton, Malcolm


Stanbrook, lvor
Townend, John(Bridlington)




Trippier, David
Wheeler, John


Viggers, Peter
Winterton, Nicholas


Waddington, David
Wolfson, Mark


Waldegrave, Hon William



Walker-Smith, Rt Hon Sir D.
Tellers for the Noes:


Watson, John
Mr. Selwyn Gummer and


Wells, John(Maidstone)
Mr. David Hunt.

Question accordingly negatived.

Clause 4

INCREASED BORROWING LIMIT FOR NATIONAL Bus COMPANY

Mr. Roger Stott: I beg to move amendment No. 3, in page 3, line 9 at end add
'This draft order shall show the extent to which the increase in the borrowing arises from the National Bus Company having to service those debts attributable to additional mileage operated during 1975, and to London Country Bus Services Co. Ltd. and the interest charges on commencing capital debt being imposed on individual subsidiary companies or counties'.
The Bill makes provision to increase the National Bus Company's external financing limit on aggregate borrowing from £200 million to £250 million with an upper limit of £275 million, subject to the Secretary of State's approval. While we are grateful for small mercies, it should be made clear that the National Bus Company, through the provisions of the Bill, will not receive a penny more from the Government to help it to offset its operating costs or to reduce the interest charges that the company must pay on its essential borrowing both past and present.
The Opposition did not try to amend the clause in Committee. Instead, we decided to probe the Government on key issues during the stand part debate. However, I must inform the House that the Under-Secretary of State's reply was far from satisfactory. Consequently, my right hon. Friend, my hon. Friend and I have decided to table this eminently reasonable amendment to restore some justice to the National Bus Company.
When the National Bus Company was formed in 1969, its financial structure was established on the basis of capital debt, which must be almost unique in contrast with the financial structure of a private company. Private companies are usually launched with a mixture of equity capital, ordinary shares and fixed interest loans, but the capital debt incurred by the National Bus Company in 1969 was regarded as an entirely repayable debt, rather than a sum invested in a business on which dividends would be paid, as would be the case in most private and some public businesses. Because the company structure was conceived in what I consider to be an inequitable way, two serious problems have arisen as a direct consequence.
First, there is no flexibility in the structure to enable less interest to be paid in a poor trading year. Instead, further loans must be obtained to cover losses, thus adding to future problems, or further fare increases and service cuts must be made at short notice, with all the attendant problems of trying to get the changes approved by the appropriate traffic commissioners.
Secondly, not only must the fixed interest be paid. In theory, the commencing capital debt must also be paid. Only in a highly profitable situation could that be possible. In practice, to meet the ongoing demand, further loans had to be obtained at far higher interest rates than those applying in 1969.
As if that were not sufficient financial impediment, the position was further exacerbated by the need to obtain further loans to cover the operating losses incurred by London Country Bus Services Limited, which the National Bus Company inherited from London Transport in 1970. The establishment of LCBS as a separate entity results from the Transport (London) Act 1969 about which we have heard recently.
The country division of London Transport had lost £2 million in the two years prior to the transfer. That unprofitability, together with the provisions of the 1969 Act, forced LCBS to start life in an extraordinarily impoverished position. A substantial fleet was inherited by the National Bus Company, with an average age of 18½ years and some vehicles 25 years old. That situation continued until 1973. Buildings were also outdated and had deteriorated considerably due to the lack of earlier investment, and the company started out with no head office and no central repair works.
Financially, the company was formed with £2 share capital and £2, 500 in petty cash, which did not go far to meet the ongoing losses and an inherited deficiency of £750, 000 per year from agreements on matters such as welfare and pensions. To remain operational, the company had no alternative but to borrow heavily. No depreciation reserves were transferred, although in London Transport's books they stood at £5·5 million on vesting day.
Despite the company's impoverished birth, the financial objectives laid down in the 1969 Act were extremely stringent. They were
to secure that the revenues are not less than sufficient to meet the charges properly chargeable to revenue account, taking one year with another, 
and including, in particular, proper provision for the replacement of assets. All of that resulted in a financial deficit on the 1975 management accounts of £5·2 million with losses being repetitive and increasing. They are still being paid off.
10.30 pm
Most unbiased observers would conclude that that was a substantial burden to hang around any company's neck, but the story gets even worse for the National Bus Company. In 1975, it continued to operate a considerable mileage which, on any objective financial grounds, would have been cut because of substantial operational losses. However, it did not cut that mileage because of a specific request from the then Minister of Transport to continue operating it while local authorities made up their minds what level of financial support they would provide.
Ordinarily, such action would merit specific compensation to be paid to the National Bus Company by the Government. However, no such compensation was paid, so the poor old company had to pay interest on the extra debts incurred in carrying out a ministerial instruction. Even today, repayment of that debt continues to form a burden on the travelling passengers who use National Bus services and on the counties that pay transport supplementary grants.
The Select Committee on Nationalised Industries 1977–78, when examining that aspect of National Bus Company's finances, said:
For any business, this burden would be considerable, for one with a market which has contracted, and which is in any case expected to receive supporting grants from public funds it is almost unworkable. In practice, NBC has met its 'obligations' in this respect, but only by a willingness to cut services, raise fares and make other economies.
A more direct comparison with the company could be drawn by considering London Transport. Its debts were entirely written off in 1969 and its current investment in buses has been entirely met by central Government and GLC grants.
The Select Committee on Nationalised Industries 1977–78 report, reflecting on what would have happened had those rules been applied to the National Bus Company, said:
Were NBC to have this arrangement, it would be able to operate the levels of service and fares applying in 1977 without the need of any further revenue support from local authorities.
The local authority grants amounted to £26 million, interest payments to £12 million and the net cost for bus grants to £15 million. Therefore, it is important that the House should recognise that the company faces a real difficulty in repaying the interest on money it has had to borrow, as I have endeavoured to show.
However, regrettably, there is a belief in some quarters that the interest charged on that borrowing represents a very small amount of the National Bus Company's costs. I fear that that view is taken by the Department of Transport which does not appear to have a destruct button anywhere.
When replying to me in Standing Committee, the Minister said:
The facts behind the debate are not as the hon. Member for Westhoughton (Mr. Stott) seems to believe. The burden of interest charges on the commencing capital debt has actually dropped, and represents a very small proportion of the NBC's costs."—[Official Report, Standing Committee D, 17 December, 1981, c. 143.]
The Minister's view ignored the narrow margins on turnover to which the group must work.
When the interest burden is related to the action that is being taken to sustain the group's financial position, it becomes a significant factor. The National Bus Company has stated that the action that it took in 1981 was designed to reduce its stage carriage services to achieve a saving of £25 million. The interest payments during that year amounted to £18 million. Nearly three quarters of the action that has been taken by the company has been carried out to enable it to service its commencing capital debt—in other words, to pay a dividend in a bad year. It is no good the Under-Secretary of State trying to dodge that fundamental and incontestable fact.
If the company's position were not bad enough, the Government have added further to its problems. Its problems have been compounded by the provisions in the Transport (Finance) Act 1980. The company is now having to operate in free market competition with private bus operators that do not have such financial impediments placed upon them. No bus operators, whether they be the shire counties, the PTEs or private operators, have to operate with such a financial impediment.
The Minister said in Committee on the Transport (Finance) Bill 1980 that free enterprise is a good thing and that fair competition is proper. If I accept what he says on this issue, which I do not, he must recognise that the company is not operating in a market in which it can compete effectively if it has to pay the interest charges that I have described.
The amendment seeks nothing other than to obtain for the company a measure of natural justice. In its conclusion the Select Committee on Nationalised Industries reported:
For all these reasons"—
for the reasons that I have been deploying for the past quarter of an hour—
your committee consider that a change should be made. They recommend: (a) that the Government should write-off entirely those debts of NBC attributable to additional mileage operated during 1975 and to London Country Bus Services Ltd.; (b) that

the interest charges on commencing capital debt should be met directly by the Government by direct grant to NBC, and licit imposed on individual subsidiary companies or counties.
That is what the Select Committee recommended in 1977–78. I regret that the previous Labour Government took no notice of those recommendations. I am prepared to defend that Government's marvellous record, but it is legitimate to say that in some areas they had blind spots.
We have a new system of Select Committees operating under this Government and the Select Committee on Transport recommended:
the Government should now reconsider their attitude to the earlier recommendations of the Nationalised Industries Committee and should consider a possible restructuring of the finances of the National Bus Company by conversion of the original and subsequent capital debts into Government-held dividend shares in the Company.
That is a fairly recent recommendation.
I am asking the House to consider the eminently reasonable arguments that have been advanced by Lord Shepherd as chairman of the National Bus Company. If we seek to maintain the levels of public transport that we now have and if we wish to see levels of public transport maintained in rural areas, the company must stop operating with one of its arms twisted up its back. That could happen if the Government showed a little sense, by accepting a reasonable amendment that is totally non-political. It makes the point succinctly. I hope that we will receive a better response than we did in Committee.

Mr. Kenneth Clarke: My starting point is that I agree with the aim expounded by the hon. Member for Westhoughton (Mr. Stott), which is that there should be fair competition between different bus operators. It lay behind our Transport Act 1980 that we were opening up more routes to competition, but we accept that the competition should be fairly based between the various parties, and that there should be no unfair discrimination between the public sector and the private sector operators, favouring either the one or the other. That means that in dealing with any company, one has to look at what its costs are. Any company must seek to service its capital, which means operating costs one way or another.
It underlies the Government's approach to such businesses that the costs of servicing the capital required in the capital creation of the company are as much costs of a business as are the costs of labour and the costs of fuel. That is true of private and public sector business. That has been acknowledged by successive Governments in dealing with the financing of nationalised industries.
The hon. Gentleman is asking that we should write off a substantial part of the capital debt of the National Bus Company to give a new form of subsidy to it from the taxpayer, leaving the taxpayer to bear the costs of the capital structure of the National Bus Company, thereby giving it an unfair advantage vis-à-vis its private sector competitors. That view was not taken by the previous Government, and is not likely to commend itself to the present Government. It cannot be supported on an analysis of the past events that the hon. Gentleman went over. He mentioned 1970, when the London Country Bus Service was formed and 1975 when the then Labour Minister stepped in with instructions about the way in which it was to respond to a short-term financial crisis.
It is true that the capital structure of the National Bus Company is different from that of many of its private sector competitors. Being a nationalised industry, it is entirely financed by fixed interest debt. In bad years there


is the disadvantage that it cannot reduce its interest payments, whereas, if it were a private sector company, it would withhold payments of dividend. However, that applies in bad years. In good years a private sector company has to distribute its profits, and in good years the National Bus Company is tied to the same payment of fixed interest on its debt.
If a private sector company considered that, if it got into trading difficulties, it would suspend the payment of dividend and would carry on not paying dividends to those servicing its capital for as long as it was necessary because of its financial constraints. Eventually it would run out of the ability to raise fresh investment to finance its activities and would suffer penalties. To leave the National Bus Company in the position required by the hon. Gentleman—its commencing capital debts would be written off, it would have no interest payments, presumably it would have no equity and no dividends to pay and its capital would be provided free by the taxpayer—would be to give it a novel form of subsidy.
I do not want to go over the history of the two previous matters that persuaded the Select Committee to make its report to the House and which persuaded people to put the argument that the hon. Gentleman has put to the previous Government and this Government. It is pointless to look back to 1970 when the London Country Bus Service was created. It received the assets debt free on transfer in 1970. It had to borrow money to get through the short-term crises, but other companies, including other National Bus Company subsidiaries, had to borrow to build up the capital structure of the business. It would not be fair to treat the London Country Bus Service differently from other NBC subsidiaries or other companies.
I shall not rehearse the arguments about 1975. I would be repeating arguments used by Ministers at the time to explain actions taken by the previous Labour Government. It was never accepted by the previous Government, as is usually argued, that enormous sums of borrowing were forced upon the NBC by the decision to make it run additional services. It is true that the previous Government stepped in and asked the NBC not to cut back services at a time when the new revenue support system was being built up. The argument that all the borrowing incurred in 1975 should therefore be written off by the Government pre-supposes that but for that Government instruction no borrowing of any kind would have been carried out by the NBC in that year or that it would have been able to cut services to the degree necessary to avoid new borrowing within the time that was necessary in 1975 and thereby avoid any of the present debt payments.
10.45 pm
I can hardly claim to have been party to what happened. The previous Government made the decision in 1975. The previous Government insisted that it gave no ground for wiping off that part of NBC's capital debt. We are not likely to be able to change that policy now.
The Government appreciate, as I have already remarked in relation to British Rail, that the NBC operates in difficult circumstances. The Government have set a stiff financial target that it is endeavouring to meet. The NBC is under external financing limits but succeeds in keeping within them. It is steadily improving the performance of the business. It is reducing costs, matching services to

demand and improving productivity at an impressive rate. It is improving performance within the imposed constraints.
The Government would not wish to add an unfair or impossible interest debt. I have pointed out in Committee that the burden of capital debt does not seem to us overwhelming. It is reducing somewhat. I stated:
The burden of interest charges on the commencing capital debt has actually dropped, and represents a very small proportion of NBC's costs.
The hon. Member for Westhoughton reacted to my remark but did not deny the truth of it. Both statements are accurate. I told the Standing Committee that the total burden of interest paid by the NBC has dropped markedly over the years. I stated:
In constant mid-1981 prices, the total interest paid by the NBC in 1970 was £19–7 million; in 1976, £21·1 million, and in 1980 it dropped to £19·3 million. The interest paid on the commencing capital debt
which is meant to be the basic subject of the amendment
at mid-1981 prices, dropped from £19·7 million in 1970 to £11·2 million in 1980."—[Official Report, Standing Committee D, 17 December 1981, c. 143–4.]
The case that interest charges should be wiped off is an old battle, rejected by the previous Government and rejected still by the present Government. It is a burden that represents only 3 per cent. or so of NBC's total operating cost. It is a burden that is reducing over the years. One area remains where the Government has acknowledged to the NBC that difficulties occur. This is that the distribution of the debt between the different subsidiary companies is not readily justified. The burden of debt between individual National Bus Company subsidiary companies is rather a matter of historical accident than present realties.
Because the Government believed that there might be a problem, Touche Ross was asked by the Government and the NBC to report on the distribution of the debt between the companies and the relationship between the debt and interest charges and the earning capacity of the individual companies, how the present arrangements affect their operations and financial decision-making and the prospects for the companies in the present financial regime.
The report is not yet to hand. There will no doubt be recommendations made that shed some light upon the way the burden of capital debt and interest charges is distributed within the company. I do not believe that anything from Touche Ross is likely to support the contention that the capital debt of the NBC should be written off and borne by the taxpayer. This is equivalent to the burden shared by similar businesses and by their private sector competitors. It is not an onerous burden. I congratulate National Bus on the success it is achieving in difficult trading conditions in modernising its business and improving its commercial performance. I know that some if its managers feel strongly about this. I am afraid they are mistaken. National Bus will have to live with the reality, as every other business does, of servicing its capital while coping with the problems that other business management has to tackle.

Mr. Stott: I shall not detain the House much longer. I do not agree with a substantial part of the Minister's reply. It is merely a repeat of his reply to me in Standing Committee. I thought that I would try to approach the matter differently and allow the Minister to consider in detail what I said.
The Minister said that it is pointless to look back to 1970. That may be so, but the National Bus Company still has to pay interest on the money that it borrowed in 1970. It had to borrow the money then because it was told to take over an ailing and virtually bankrupt subsidiary company. Therefore, it was something it did reluctantly.
In 1975 the Minister asked the National Bus Company to carry on operating routes that it would ordinarily not have operated on. Therefore I do not think he should say that it is impossible to quantify the cost of keeping those routes going. The National Bus Company has informed me that in its best judgment it costs it £23 million, on which it is continuing to pay interest. We are talking not about any company but about a company that was given specific obligations: one, to take over the London country bus services and the other to keep routes open that it would not otherwise have kept going. If the Government would at least consider those two aspects of the problem and try to do something about them they might be able to get away with the argument that it is not incumbent on them to pay the interest charges on the initial capital debt.
I am thoroughly disappointed with the reply of the Secretary of State. We have tried to make the case as best we can. The National Bus Company has got a good case. I hope that the Select Committee on Transport, on which Members from both sides of the House sit, will continue to make recommendations in the National Bus Company's favour, and that at some stage, when my right hon. Friend the Member for Barrow-in-Furness (Mr. Booth) is Secretary of State for Transport, we may reverse the Government's decision.
I am conscious of the time and I would no doubt incur the wrath of the House if I were to push this amendment to a Division. Having said that I am disappointed with the reply of the Secretary of State. I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Motion made and Question proposed, That the Bill be now read the Third time.—[Mr. Kenneth Clarke.]

Mr. Arthur Palmer: This Bill, on which we have had a long and interesting debate, dealing principally with railways and for a shorter period buses, also contains clause 5, which deals with ports. This is headed
Port of London Authority and Mersey Docks and Harbour Company.
The intention of that clause, as I understand it, is to advance more Treasury money to the ports of London and Liverpool for employee severance payments.
On Third Reading of the Ports (Financial Assistance) Act last year I spoke about its effect on other ports than London and Liverpool, which it was designed to assist. The Under-Secretary said at one stage that it would have no effect, or only a small effect, on their financial situation. I disputed that, with the port of Bristol particularly in mind. That ancient port is municipally owned. I think that it is the largest surviving municipal trading undertaking in the country, funded on the security of the local government rates. It is losing money, under present conditions, and will go on doing so increasingly rapidly unless there is remedial financial action.
In the past few months a new radical financial plan has been drawn up, with the assistance of outside experts, and it is now before the Department of Transport and the

Department of the Environment. A response is hoped for fairly soon. In Bristol we have been waiting for quite a time for the response.
However, I am not dealing with that aspect now. I want to confine myself to the special point of the Bill's indirect effect added to that of last year's Act. The problem is particularly acute in Bristol, but other ports are also affected, I am sure.
There seems to be a widely held belief, which the Government do little to correct, that the cost of the special voluntary severance scheme for registered dock workers in London and Liverpool is met wholly from Government funds. That is not so. I understand that the Government have financed severance compensation up to a maximum only of £5, 500 per man, and that the basic cost of up to £10, 500 per man has been met by the port employers' national voluntary scheme, funded by all the scheme employers, including, of course, Bristol. I am told that 60 per cent. of the scheme payments are applied locally and that 40 per cent. come from the national voluntary fund supported by all the ports.
Because of the numbers involved, varying from port to port, already hard-pressed ports such as Bristol have to put their hands in their pockets to help reduce the labour force in Liverpool and London. These other ports that have had to help the successful working of redundancy in London and Liverpool receive no Government help. That is wrong and unfair. The position was bad enough under the provisions of last year's Act. The offence against justice and equity has now been compounded by the present Bill.
I do not know whether it was said during the debates on last year's Act, but it has been said by the Department of Transport and its officials in conversations with the port of Bristol and the city council that Bristol does not qualify for special national help as it can always draw on the rates. Bristol does not need to be told that it can always draw on the rates. It is doing so. Every local industry and old age pensioner makes a greater or lesser contribution and the subsidy from the rates helps not only the port of Bristol but London and Liverpool indirectly.
Bristol is an economical local authority. It is forced to be economical. Anyone who drives on the roads or walks on the pavements in Bristol will feel and know the economies that have been made.
Because of the subsidy that Bristol gives to the port, it has become, in the Government's eyes, an overspender, so the Secretary of State for the Environment further penalises Bristol by withdrawing a portion of the rate support grant. One Minister tells Bristol to milk the rates and another says that the Government will hit Bristol hard if it does so.
I end by quoting Mr. Stanley Turner, the general manager of the port of Bristol. In a recent letter to me he stated:
The treatment of the Port of Bristol, which is experiencing financial difficulties comparable with those of London and Liverpool, compares starkly with that afforded to these two Ports, to the point where one begins to speculate as to whether, in fact, the Government would not be unhappy to see a closure of the Port of Bristol, in spite of the extremely serious economic and social consequences"—
I believe that he means locally—
together with the loss of what I regard as an important national asset.
Potentially the new Royal Portbury dock is certainly one of the finest in Western Europe.
Mr. Turner continues:


I sincerely trust that such a thought is unjustified.
I am not as charitable as he is towards the Government. From time to time the hard thought passes through my mind that they have little interest in the port of Bristol or the ratepayers who are asked to sustain it.

Mr. Nigel Spearing: I, too, wish briefly to refer to clause 5. It gives further authorisation of £200 million to the ports of London and Liverpool, as my hon. Friend the Member for Bristol, North-East (Mr. Palmer) said. However, I do not share his views about the help that the money will give, certainly to the port of London, in the long run.
The limits in the Ports (Financial Assistance) Act 1981 can be raised, and that lies behind this measure. The object of the Act was to assist the ports of London and Liverpool to become financially viable, largely by reducing manpower. But that is not the only way in which a port can become more financially balanced. At the eighth sitting of the Committee on 28 December I made known why I thought that the Government's analysis was wrong. Far from the money assisting the port of London in the long run, in effect, I said that it could hasten its decline. I shall not repeat that warning tonight. It has been made on a number of occasions in the House.
The second part of that debate related to the Government's accountability. It would be quite proper for us to differ on the analysis that I have just mentioned, But I question whether it is proper for this money to be voted without the Government giving an undertaking that the corporate plan for the Port of London Authority is to be published. In Committee, the Minister made it quite clear that that plan would not be published. Moreover, he did not see fit voluntarily to state that he would lay before Parliament a statement showing the purposes of guarantees and items of expenditure made under the Act, and the conditions, if any, made by the Secretary of State in respect of payment of those sums.
For reasons that are best known to you Mr. Deputy Speaker, my amendment No. 8, which would have produced a debate on this subject, was not selected. I deplore the fact that the Government have not put this in the Bill. A Government who pride themselves on their husbanding of public resources have chosen not to do so. They have chosen not to publish, or even to give an indication, apart from the commercial matters, of the plan that the Port of London Authority will impose on its work force, and which will have implications for the local authorities and many other persons in the port. I deplore that fact. I am sorry that we have not been able to write in that condition. We should have had a much better Bill if that condition had applied to section 5.
I hope that my forebodings about the use of the money will not be correct, but unless and until we have more information about how the money is spent and the way in which the Port of London Authority sees its way towards future financial viability, my doubts will remain. I fear, too, that we shall have a third Bill dealing with the problems, perhaps not only of London but of other ports. This Government are not concerned with considering a proper ports policy for the nation; rather, they take each port individually. We see each port decline in its own area.

Mr. Kenneth Clarke: I shall confine my remarks on Third Reading to clause 5, and I shall reply to the fears that have been raised.
First, I shall deal with London, the port which is directly affected by clause 5. The purpose of the Bill is to assist the port of London, with which the hon. Member for Newham, South (Mr. Spearing) so closely identifies, and in which he shows great concern. The Bill seeks to extend the limits imposed on the 1981 Act to an additional ceiling of £200 million. That will enable us to continue to help the port of London to get back to viability and profitability. We made it clear that unfortunately the problem is still a surplus of manpower, so some of this money will undoubtedly go towards reductions in manpower in the port. However, we shall continue to pay operating losses in the transitional period while changes still have to be made.
Again, we have made it clear that support for continuing losses will not continue beyond the end of 1982. That rather stiff target has to be met by London, and incidentally by Liverpool, because those ports cannot expect continued deficit financing beyond then. Meanwhile, we shall maintain the ports to whatever extent is necessary to keep them going, including some assistance with essential capital investment, which is required by both of them if they are to have a good long-term future.
The hon. Gentleman does not oppose the additional support for his port, but he says that he wants more information to be laid before the House about the way in which it is being disbursed and about the unfolding of the policy. I assure him again, as I did in Committee, that the Government have no desire to withhold essential information from the House pointlessly. We shall continue to answer parliamentary questions and correspondence, and to reveal the rate at which the money is being disbursed and the broad purposes for which it is being disbursed. Our only reticence on the subject of disclosure is that we do not wish to disclose documents which contain commercially confidential matter which could be of assistance to the ports' competitors.
The ports industry is fiercely competitive. Shippers can move their business from point to point and there is much fierce fighting between the ports to get trade. There is excess capacity at present and that is all to the benefit of shippers and to many exporters and importers. However, London and Liverpool will be placed at a severe disadvantage if, because of their relationships with the Government, documents have to be published that contain information that may be of considerable assistance to their competitors. That is the case with the two corporate plans. They were produced earlier this year and contain much commercially confidential information. If they were edited and if the confidential information was removed, the documents would be bowdlerised and useless, and would not give any clear impression of the subject matter.
The policy is not based directly on the corporate plans. We asked for the corporate plans to be produced and also had the advice of accountants. In the light of information received, we used our own judgment to come up with the present policy and the financial provisions that we think are required. Therefore, no great guidance would be given to the Government if the corporate plans were produced.
We are waiting for action plans from the two ports. We shall not be able to publish them, because those plans, 


which will show how the ports attempt to live within the restraints imposed on them and how they will use the money to meet the target of no further deficits by the end of 1982, will inevitably contain commercially confidential information. We should defeat the object of the Bill if we exposed the ports to unfair competition by making that commercial information available to their competitors.
In the previous debate I was not very forthcoming and I repeated a refusal to move that I had given in Committee. I must repeat the reasons that I gave in Committee for not accepting those arguments for greater disclosures of information. As we cannot disclose such matters, we shall endeavour to be as forthcoming as possible in such other information as we can give the House as the policy unfolds and as we disburse public money.
The hon. Member for Bristol, North-East (Mr. Palmer) fears that the Bill may—like the 1981 Act—contain more difficulties for the port of Bristol. I do not minimise the problems faced by the port of Bristol and the ratepayers of Bristol. Things are very difficult. Portbury has been an extremely unsuccessful investment so far. The port has passed through difficult times and fairly radical readjustments are required in Bristol. I hope that ratepayers, councillors and others involved in the port of Bristol do not think that we are giving London and Liverpool an easy ride. In the past 12 months, London has witnessed the closure of the old Royal docks to cargo handling by the Port of London. We hope that London's future in cargo handling lies at Tilbury.
The profitability plans produced by the port of Mersey involve drastic changes in the shape of the port, with a concentration on the Seaforth grain terminal and on modern facilities at the northern end of the port. Bristol is being driven to bring in consultants—Cooper Lybrand is assisting Bristol—and is contemplating severance for dockers, the disposal of land to reduce the capital debt and so on. Those are difficult steps, but Bristol does not have to labour under those difficulties while believing that the Government are somehow bailing out London and Liverpool in a soft option that involves reconstruction.

Mr. Palmer: The point that I sought to make was that under the Bill, which allows for severance payments, Bristol has not only to deal with its difficulties—which are real enough—but indirectly to subsidise Liverpool and London through the voluntary scheme.

Mr. Clarke: The National Association of Port Employers has a voluntary severance scheme to which all ports contribute. There is an agreed sum of voluntary severance available to registered dock workers, to which all ports contribute a levy. London, Liverpool and Bristol all contribute. The special severance scheme run by NAPE in the autumn of last year is one from which Bristol, in particular, benefited. I believe that 400 dockers in Bristol

took voluntary severance payments. Of course Bristol and its ratepayers contributed to the levy in addition to all the other ports, including London and Liverpool.
To deal with London's and Liverpool's special problems, the Government financed enhanced severance for the enormous surpluses of dockers in those ports. That took a liability off NAPE generally and off the two ports, because they were insolvent and could not deal with the extra severances required. They had no prospects of returning to viability unless some special effort was made to reduce the numbers, which we did.
I do not believe that we have discriminated unfairly against the ports. They all belong to the NAPE voluntary severance scheme. They all impose a pay levy on a basis agreed by the dock workers. They have been assisted by the Government in the past with borrowing arrangements, which are the responsibility of my right hon. Friend the Secretary of State for Employment.
There is no unfair discrimination against Bristol in the Bill. The Government have before them the latest submissions from Bristol, prepared by Cooper Lybrand, which are still being considered by Ministers and especially by my right hon. Friends the Secretary of State for Transport and the Secretary of State for the Environment. We shall respond to those submissions soon. We are not unappreciative of the problems of Bristol. On the other hand, I must enter a few notes of caution. If we were to give special help to Bristol, we should face allegations that other ports also facing difficulties were being discriminated against and that we were bailing out Bristol from trading difficulties. I must also add a note of caution about local authority trading. The port of Bristol was developed by the local authority. When it received Government approval it was expressly agreed that the port was the responsibility of the local authority in all ways. Now many local authorities are talking vaguely about engaging in trading activities of one sort or another. It cannot be a sound basis for such activity that a local authority can incur, on its own account and responsibility, a major capital investment and trading responsibility and, if the matter goes wrong, expect the national taxpayer to step in and relieve it of the liability.
I say that only in general terms. The submission that has come from Bristol is not so crude. Complications and real difficulties are being faced by the ratepayers. However, the hon. Member for Bristol, North-East knows that. Ministers in any Government must face up to general issues of policy. Therefore, we shall consider the proposal sympathetically, but I do not wish to be too encouraging. In the last resort, it is Bristol's responsibility to take the difficult steps that I commend to try to get the port out of its present mess and back on a more sound financial footing.

Question put and agreed to.

Bill accordingly read the Third time and passed.

Northern Ireland

The Under-Secretary of State for Northern Ireland (Mr. David Mitchell): I beg to move, 
That the draft Rates Amendment (Northern Ireland) Order 1981, which was laid before this House on 17 December, be approved.
The order, which is short and straightforward, tries to do two things—to permit of the valuation and rating as a single hereditament, in suitable cases, of caravan sites or portions of sites and, secondly, to enable the rating authority for Northern Ireland, in reckoning rate liability, to disregard minor valuation changes until the next rating year.
The permissive power sought in article 3 in relation to the valuation and rating of leisure caravans has become necessary because over a period of years patterns of occupancy have evolved so that many have achieved the status of hereditaments within rating law. In short, they have become a sort of weekend cottage. That has faced the valuation office with a statutory duty to initiate action for inclusion of such caravans in the valuation list. It will readily be seen, however, that the collection of rates from individual caravan owners, whose normal domicile could be dispersed throughout the length and breadth of Northern Ireland and beyond, would be troublesome to the ratepayers and extremely difficult to administer by the rating authority. For example, many caravans do not have letter boxes. The caravanners are not happy with the system.
A precisely similar situation arose in Great Britain about six or seven years ago and it was dealt with by the Rating (Caravan Sites) Act, which was enacted on 13 April 1976. That parallel legislation in Northern Ireland has not until now become necessary is a reflection of the fact that the developments in leisure caravanning that gave rise to the 1976 change in Great Britain have been slower to occur in the Province. Therefore, the present proposals represent the extension to Northern Ireland of provisions that have operated very satisfactorily in Great Britain since April 1976, and will have the effect of placing the Province on all fours in the matter with the rest of the United Kingdom.
I should make it clear that article 3 would not increase the liability for rates that would otherwise accrue in respect of any leisure caravan. In the past some people have escaped the net, but from April 1982 they will be drawn in.
The order essentially is concerned with the unit for assessment of rateable valuation and the locus of liability for rates. The criteria that determine rateability are exactly the same in Northern Ireland as in other parts of the United Kingdom and these criteria are unaffected by article 3.
The proposal in article 4 is designed to enable postponement of the rating effect of minor valuation changes that extend to Northern Ireland, with some modification—a change in the law brought into effect in England and Wales by section 21 of the Local Government Act 1974. It differs slightly from that Act because it takes account of experience of the operation of the legislation in this part of the Kingdom and seeks to avoid certain anomalies that have arisen in the operation of the law in England and Wales.
Under Northern Ireland law as it stands, changes in the net annual value of hereditaments are effective from the

date on which the changes take place. Thus, for example, if an extension to a dwelling valued at £30 is occupied on 1 July, for example, the increased rates are payable from that date. But a very significant amount of administrative effort is expended by the rating authority in establishing the effective dates of occupancy in such cases, at considerable cost to public funds, and it has been concluded that any temporary loss of revenue from postponement of the rate effect of minor changes will be more than offset by the savings.
Article 4 of the order therefore provides that an alteration in the net annual value of any hereditament, provided that such alteration does not exceed £30, or such other amount as may be specified by order, will not be taken into account in assessment of the rate liability until the following rating year. Thus, in the example that I referred to, the extension occupied on 1 July would not become liable for rates until the following 1 April.
The postponement applies to both increases and decreases. That is logical, since we are dealing with the savings of administrative costs and a valuation difference of £30. The limit is the same as it is in Great Britain.
The order was published as a proposal for consultation and contained a provision the effect of which would have been to discontinue the small discount allowed for prompt payment of domestic rates. I am pleased to be able to assure the House that this has been dropped in view of the virtually unanimous opposition from Northern Ireland representatives in Parliament, and from local authorities, many of which I have spoken to in my visits to the Province. Many people, including private householders have raised the subject with me. Because of that the Government have decided, without prejudice to any future decision, to drop the proposal from the order as laid and to give the matter further consideration in the light of the views and advice received.
The order is modest in length and its objectives are of no particular complexity. Its general objective is to bring Northern Ireland law closer to that of Great Britain. I commend the order to the House.

Mr. Clive Soley: The Opposition have no objection in principle to the order, but we wish to raise one or two points. Perhaps the Minister will be good enough to respond in due course.
Caravanners, I suppose, like boat owners, are frequently in an anomalous position in relation to tenants of one type or another. Under the order, as the Minister has said, the district valuer will levy the rate on the site itself and the owner will then divide it up. The owner's responsibility appears to be confined largely to putting up a notice showing the overall rate and then arranging for collection and payment to the local authority.
The House should note that the caravan owner pays a fee for a licence that does not give him any security of tenure, so the site owner is already in a considerably more powerful position than the person who rents the site from him. To give the site owner the power to divide up and collect the rates without safeguards adds to that difference in the power relationship between the two.
Many site owners may use that power properly and responsibly, but the fact that the Monopolies and Mergers Commission is to investigate the supply of pitches for holiday caravans in Northern Ireland suggests that there is a problem. I gather that not the least aspect of that problem


is that the renting of a site may be linked with the sale and purchase of caravans. A person wishing to rent a site may be told that he must buy a caravan from the site owner or sell the caravan back to that person. I understand that the Monopolies and Mergers Commission will be investigating the supply of pitches and I hope that it will take these matters into consideration, but I note that it is not expected to report for at least another year.
Given that caravanners are now to pay rates, there is a strong case for people renting sites to have either security of tenure or some form of enforceable—I emphasise the word "enforceable"—code of practice. Perhaps the Minister can give an undertaking that, following anything that the Monopolies Commission may recommend in a year's time, he will come back to the House on this subject and that he is prepared to ensure that those renting caravan sites receive some degree of protection either through security of tenure or through a code of practice that is enforced. If people are to pay rates on the site, they should have some security.
One must also ask what rights the caravan owner obtains by paying rates. Is his rubbish collected? Is a water supply provided? Or is this solely a matter for the site owner? If it is a matter for the site owner only, what is the position if the person renting the site receives no services? If he is simply given a patch of ground on the site, with no water supply, no rubbish collection, no toilets, and so on, will he pay no rates or just a very low rate? That is a pertinent question for anyone considering renting a site.
Disputes might also occur between the site owner and the caravan owner. If it is left to the site owner to decide how the rates are to be divided up, many differences might occur. The size of caravan is important. Would a small van be rated the same as a large van? The provision of services is also relevant. One person's caravan may be close to all the services while another is on the other side of the field with little access to services. If both have to pay the same rate there may be a feeling of unfairness.
What will happen if such differences arise? So far as I can see, there is no provision of any kind to deal with them. It seems to be simply a matter of the caravan owner arguing his case with the site owner. That seems to leave the position wide open to potential abuse and possible conflict.
I also note that there is no possibility of rate rebates. I do not expect that to be an immense problem, but some people who own leisure caravans do not have high incomes. They may have bought the van many years ago and now be receiving a pension. If there is a high site value and the site owner imposes a high charge on those people, to whom can they appeal?
Will a person who sells a caravan halfway through the year pay the whole year's rate or will he get a rebate, with the new owner paying rates for the rest of the year? If the van is moved off a site will the site owner keep the rate money?
I do not expect the Minister to reply to all my questions tonight, but I ask him to give serious attention to the question of security of tenure or a code of conduct. That would be a way of checking some of the abuses that could develop. Obviously, I shall be interested to hear any answers that the hon. Gentleman can give.
There has been relatively little—I put the matter as cautiously as I can—consultation with the Northern Ireland Caravan Owners Association or, at least, its submissions do not seem to have been taken into account

in the legislation. The association voices the concern of not only the consumer, but the ratepayer and it deserves to be consulted carefully. I do not suggest that the association is the only representative of the consumer and the ratepayer, but it should have been listened to, particularly in regard to security of tenure and a code of conduct. I hope that the Minister will consider those matters in due course.

Mr. James Molyneaux: I thank the Minister and his noble Friend Lord Gowrie for responding to my letter of 30 September 1981 in which I expressed opposition to article 5 in the original draft order. My panty expressed the view that, although the practice of discounts for prompt payment of rates may be diminishing in Great Britain, it was inappropriate to abolish the discount provision at a time when interest rates for local authorities were well over 15 per cent. The Ministers have acted in the best interests of the Treasury, local authorities and individual ratepayers by withdrawing article 5.
We welcome the provision in article 4 for changes in valuations not exceeding £30. As the changes would mostly be upwards, I am sure that the deferment will be welcomed. They are to be delayed until the beginning of the rating year following that in which the changes take place. That will make for much tidier administration and is a sensible improvement.
The main part of what is left in the order concerns the valuation and rating of caravans. Like the hon. Member for Hammersmith, North (Mr. Soley), I hope that the rates will be modest. It would be a mistake to imagine that caravanners are well-off people who can afford a second home. For many, a caravan is a modest luxury and, in many cases, an alternative to the type of holiday that owners would like to take if they could afford it.
May we take it that there is no change in the position of the other two categories? Presumably, permanent residential caravans will continue to be separately rated, and caravans used for touring and not permanently sited on any pitch will presumably continue to be exempt from rating, as they are in the rest of the United Kingdom.
There has been some confusion about the proposed method of assessment. Paragraph 3 of the explanatory document starts fairly clearly, but in the second line complicates matters by the phrase
taking full account of the assessments attributable to individual caravanners".
Do those words mean that the valuation officer will have regard to the standard, type and amenities of individual caravans and then total his sums to arrive at the valuation for the whole site?
Paragraph 3 goes on to state that
the site operator would then be responsible to the rating authority for payment of rate on the entirety of the site".
I understand that to mean that the site owner will collect and pay rates for the whole site. Does it also mean that the site operator will subdivide the total rate? Can he be prevented from, say, quartering the site before apportioning the rate on individual caravans? There could be a vast difference in the numbers of pitches in each quarter, with dramatic variations in the rate demanded from caravan owners. If the operator strikes an average, will it be the average for the whole site?
In fairness to site operators, it must be admitted that the order places them in difficulty. A site owner will be the


allocator as well as the rate collector. There would appear to be no way of appealing against his allocation. Admittedly, each caravan owner has the right to apply to be valued and rated separately, but there is more than a suggestion that he may end up paying more than the average for the site. I doubt whether that will be regarded as satisfactory.
The question that then arises—it featured prominently in our debates in 1976 when the Great Britain legislation passed through the House—is: will there be a flat rate irrespective of the size of caravans? Will account be taken of those connected to mains water supplies? Incidentally, connection can cost up to £176. Will caravans parked on a pitch with a sewerage system be rated at a higher level?
When will payment be due? Can a site operator force occupiers to pay as soon as the demand is received, having been broken down and furnished by him to the occupiers as a secondary or delegated rate demand?
If an operator wishes to get rid of an occupier, will he be able to use the significant power given to him under the terms of the order as a powerful lever? If so, what safeguards can be devised and provided?
I understand that any instalment scheme would have to be worked out between the operator and the occupiers. Would it be possible for an operator to demand and obtain immediate payment from occupiers and then to use the instalment plan to make his payments to the Department of Finance?
I notice from the note dated 26 October 1981 that a site operator would have no entitlement to discount. Has the payment of rates on caravans been altered by the dropping of article 5 from the original draft order? If so, will a site operator benefit from the discount arrangement? More importantly, will a site operator pass on such benefit to caravan occupiers?
I support the plea made by the hon. Member for Hammersmith, North (Mr. Soley) that, in return for this significant imposition of rates on caravan owners, the Government should seriously consider providing security of tenure and an effective code of practice.
I note that the order follows closely the Rating (Caravan Sites) Act 1976. That legislation was made necessary because certain decisions of the Court of Appeal in 1966 threw the then legislation into something approaching chaos. In 1976, English Members put many of the questions we are discussing. Can the Minister say how the 1976 Act is working out in practice?
We need to be assured that we are not enacting legislation which is proving defective and unworkable in the rest of the United Kingdom.

Mr. David Mitchell: We have had a short but probing debate on the order and, as I said at the outset, it has become clear that the order's objects are modest and its general purpose uncomplicated. The main effect of the provision will be to bring Northern Ireland law, on these matters, into closer alignment with that of Great Britain and confer benefits on Northern Ireland ratepayers which they do not presently enjoy.
I can assure the hon. Member for Antrim, South (Mr. Molyneaux), who leads for the Official Unionist Party, 

that the law in that respect is operating perfectly satisfactorily on the mainland and, therefore, we are content in seeking to follow it.
The hon. Member for Antrim, South was pleased with many aspects of the order and particularly welcomed the delay in implementing the £30 rateable value changes. I am glad that that and the dropping of the discount proposal have met with his approval.
We have tried to make our consultations genuine in these matters and to take account of what the hon. Gentleman and other hon. Members said, as well as the views of elected industrial councillors.
I was particularly asked whether the touring caravans continued to be exempt and I can assure the hon. Member for Antrim, South that they do. I was then asked whether the sites were all considered individually by the valuation office in arriving at the totality for whole site. I can give that assurance; it operates in that way. I was then asked about the protection for the occupier if the site operator shares out the amount assessed on him in a disproportionate way. The hon. Member for Antrim, South talked of quartering the site with different proportions of caravans on the quarters.
Since every occupier has the right to seek to have a separate valuation for his site and, indeed, to pay his rates individually if he so wishes, there is an absolute safeguard against the site operator behaving in an unscrupulous manner or, by chance, inadvertently treating an occupier unfairly.
The hon. Member for Antrim, South probed for more assurance about that. He particularly asked me whether there would be a flat-rate assessment regardless of a caravan's size. For example, a site might contain 100 caravans, 20 or 30 of them four-berth or 40 or 50 six-berths adn some two-berth. That factor is considered by the valuation officer when he makes his valuation because he is valuing on the normal basis of what a caravan would let for.
The hon. Gentleman asked me whether there would be higher rateable values for caravans with sewerage and mains water facilities. The answer is, "Yes, of course". That is one of the factors to be taken into account in assessing rateable value. The hon. Gentleman is right in suggesting that the operator acts in the course of fulfilment of the order as a subsidiary rate collector. That is for the convenience of the Government and individual caravaners, who may often leave their caravans for considerable periods at the site without being in occupation, who may not have letterboxes and who often have great difficulty in being able to receive individually posted rate demands at the sites of the caravans, as opposed to demands being sent by operators to their homes together with rent demands.
I was asked whether an operator can demand payment immediately and then pay by instalments. Yes, he can. Before the hon. Member for Antrim, South says that that is unfair, may I say that those who will operate the system will no doubt assure the hon. Gentleman that any operator who was paid immediately he demanded payment would be a surprised man? That certainly applies to some occupants.
Can a discount be obtained by the operator? Yes, it can. Whether he passes on the discount is a matter between him and his tenant. For the reason that I have given I doubt whether he would receive the money in full.
The hon. Member for Antrim, South, together with the hon. Member for Hammersmith, North (Mr. Soley), referred to the Monopolies and Mergers Commission's report and a desire for a code of practice. The hon. Member for Hammersmith, North fairly referred to the powerful position in which site owners find themselves, the need for some safeguards, and the strong case, as he saw it, for an enforceable code of practice or security of tenure. We must await the commission's report, but that will not be relevant to the order. I can give him the assurance that he implied he would like, and that is that we shall consult the caravaners' representatives in considering the results of the report.
I have been asked about rates payable for local government services. Rates are not to be seen as payments for services, as they are a tax. The absence of services will be taken into account in the assessment of the net annual value. Some sites are, of course, better than others, and I have been asked about rights of appeal. It is important that built into the order is the right of the individual to seek his own assessment. He has a statutory right to be assessed separately and to pay separately, but he does not have a statutory right to say, "If I were to seek to use my statutory right, what would it cost me?"
I can give the House the assurance that by administrative action we shall make it possible for any individual tenant who fears that the site operator has been unfair in his distribution of the burden to ascertain what it would cost if he paid direct. In most instances it should be very slightly more profitable for him to pay through the site operator rather than individually. If he finds that it is cheaper for him to pay individually, he should take up that right.
I believe that I have covered the issues that have been raised in this short but probing debate on what we intend to do and how we intend to operate the order. I commend the order to the House. In its administration I shall take into account the issues that have been raised so cogently by hon. Members.

Question put and agreed to.

Resolved, 
That the draft Rates Amendment (Northern Ireland) Order 1981, which was laid before this House on 17 December, be approved.

Dorset (Educational Reorganisation)

Motion made, and Question proposed, That this House do now adjourn.—[Mr. Gummer.]

Mr. John Ward: I am grateful to the House and to my hon. Friend the Under-Secretary for giving me this opportunity to initiate a short debate on educational reorganisation in the county of Dorset.
It is not too much of an exaggeration to say that, with regard to education, the county of Dorset is in turmoil. The matters of great concern can be easily divided. On the one hand there are the plans prepared by local education committees for the probable closure of many rural schools and on the other hand there are the outlined plans for the reorganisation of education in the urban conurbation, which covers Christchurch, Bournemouth and my constituency of Poole.
Of the rural school argument I wish to say little because it does not directly affect my constituency. One cannot help but observe the real concern and distress that has been caused to those who are affected. Those responsible at county hall seem unable to understand that the village school is usually the heart of any small rural community. The removal of a well-loved and well-run school can bring harm to the community well beyond the inconvenience caused to parents in transporting their young children to a more distant school. Even if small schools have limits to what they can provide beyond the three "Rs'' in academic matters, few would argue that they offer a quality of life to their pupils that must be set in the scale when their smallness, which enables them to give a personal service, is used as an argument for their destruction.
However, it is on the proposals for schools in my constituency that I wish to concentrate. We can all understand the need to reduce surplus school places, as school rolls fall. Provided that that is done after meaningful consultation and with compassion, such a reduction can be achieved, but some caution is needed, firstly, because the reduction in demand for school places in Dorset is well below the national average. Secondly, Poole is a rapidly expanding town, with a relatively young population. The removal of places will be uneconomic if they have to be restored in a few years' time. Thirdly, the costings of the various schemes must be examined objectively.
Some of the unit costs quoted locally make me wonder whether some costs have been exaggerated. The reasoning is difficult to follow. Many of us also cannot see the logic of reducing the size of the grammar schools, or of combining them to reduce their total intake. If the school rolls are falling—in Poole that is increasingly doubtful—there is an opportunity to give more of those who wish to take it, the advantage of a grammar school education.
At the centre of my plea to the House is the point that we do not wish to see wholesale change in the education system in Poole. We are served by many good schools run by dedicated staff. At the centre of our schools are the two grammar schools. Parkstone grammar school provides for girls and Poole grammar school for Boys. They have a record of academic excellence that is the envy of many an education authority.
The Parkstone grammar school was founded 76 years ago, with 14 pupils. It now has nearly 800 girls, including a sixth form of 276, which includes 54 girls transferred at sixth form stage to the grammar school from other secondary schools. At the grammar school, advantage is taken of the greater range of O and A-level courses run at Parkstone. The pass rate for both O and A-levels is generally well over 80 per cent. The school raises large sums of money for charity. It has representatives in several England schoolgirl sporting events and has a record of success ranging from music to safe cycling contests.
Three girls have gained places at Oxford university, another has secured a Plessey scholarship for a degree in computer studies and yet another has secured one of the national engineering training board awards for her degree in mechanical engineering at Loughborough university.
Poole grammar school caters for 770 boys, including 283 sixth formers, one-third of whom have joined the sixth form from other secondary schools. The pass level in both A and O-levels was over 80 per cent. last year. All O-level candidates sit at least eight subjects. There is a full range of extra-curricular activities. In sport the school has several internationals among its present pupils. For the second year in succession the school has gained the three top prizes in the sixth form section of the Abbey Life essay competition. Thirteen of the present sixth form can be expected to gain places at Oxford or Cambridge universities this year. Our grammar schools are centres of excellence. We are proud of them. Both schools enjoy good relations with the other secondary schools in the borough, which send increasing numbers of their students to take advantage of the additional facilities at sixth form level.
This is an education system that is working well. It is not surprising that many of my constituents have made representations to me that it should be allowed to continue in its present form. Like many parents, I feel that there have been too many changes and experiments in education over recent years. Scarcely have parents and pupils adapted to one scheme than another trendy idea is thrust upon them. This makes interesting material no doubt for the educational psychologists, but we parents can perhaps be forgiven if we prefer the trusted and tried methods of some years ago. There is little evidence that better results in basic education have been achieved by all the experimentation.
Although Dorset county council was one of the first, in 1979, to withdraw the proposals for comprehensive education that it was forced to submit under the Education Act 1976, there is a feeling in Dorset that a group at county hall is determined to see the ending of grammar school education in the county. Little by little, the grammar schools have been whittled away until only the four in Bournemouth and Poole remain. I sympathise with a Poole representative on the county council who said that
there was a strong feeling in Poole that the very elaborate and careful consultation exercise which had been carried out was just a cosmetic exercise.
I believe that the councillor had cause for concern. It was an exercise that largely ignored those who do not yet have children at school and moved the Poole borough council to pass a resolution stating that:
this Council instructs the Town Clerk to write to the Clerk of the Dorset County Council pointing out that the consultation exercise in respect of the proposed reorganisation of secondary

education in Poole has been directed solely to governors and managers of schools, teachers and parents of children in the school system but that no comprehensive attempt has been made to obtain the views of the people who are most likely to be affected by any reorganisation, namely the parents of children not yet in school. This Council appreciates the difficulty the Dorset County Council would have in extending the consultation exercise to embrace all persons likely to be affected in the near and medium term future, but in view of the fact that all members of the District Council have, in one capacity or another, been loosely involved in the consultation exercise, and that they are all familiar with the many points of view being currently expressed, the County Council is invited to request the District Council to express a view on the current proposals on behalf of the large number of people in Poole who have not yet had any opportunity of expressing their views.
The House may find it surprising that the county council had to be reminded by Poole borough council of such an elementary matter. My hon. Friend, the Minister and I both campaigned at the last general election on the need for parental choice in education, and I am sure that we are both agreed that no nation can afford to hold back its brightest young people.
The attitude of many of my constituents to the proposal to remove or reduce in size the grammar schools is illustrated by one who wrote to me saying:
It is in utter disbelief that I write this letter after reading, not once but three times, the report in the Evening Echo concerning the last meeting of the Education Committee. Are you really contemplating abolishing our Grammar School? Surely, a Conservative controlled Council is not going to do what a Labour Government failed to do.
Or again:
One of the considerations which made me vote Conservative at the last General Election was that 1 understood Mrs. Thatcher did not agree with a wholly comprehensive education system and wanted to give parents as much choice as possible in the type of education required for their children.
I agree with both of those constituents. It is generally accepted that the effective decision regarding the future of education in the Poole and Bournemouth area will be taken at a schools sub-committee of the county education committee meeting on 22 February. I very much regret that, in spite of the efforts of some councillors, the decision will be taken at a meeting that will be held in private. I very much agree with those councillors who believe that this meeting should be held in public.
As I have shown, this is an emotive subject and there is real concern that administrative convenience and education theory will over-rule the wishes of those who showed by their votes at the last general election that they wanted choice in education.
If there is a good argument for all this potential upheaval and uncertainty and a good case for destroying good and proven grammar schools, it will stand up to the most searching examination in public. If decisions are made behind closed doors, it will feed the suspicion that there is a group that is determined to impose its will on the electorate and introduce a comprehensive system.
The headmistress of Parkstone grammar school said it all so much better than I am able to in one of her speech day reports:
In view of the discussion now taking place in the area with the possibility of altering the whole system of secondary education we should consider what will be lost.
Both grammar schools are of high quality—the results you have heard about today reflect this—both schools enjoy exceptionally good relations with the other secondary schools in the Borough. They are happy to send increasing numbers of their students to us at Sixth Form level. Because boys and girls of ability in significant numbers come to them they can offer a full range of O and C.S.E. courses and the results achieved in our


general secondary schools complement those achieved in the grammar schools and enable these students to proceed to further education here or elsewhere.
I have very much admired the remedial work done in our general secondary schools with less able pupils—it is a special skill calling for patience and expertise—it is a skill I do not have, nor do many of my colleagues here, and we are very ready to acknowledge this. What I find more difficult to get others to acknowledge is that there is also an expertise associated with educating the most able of our students. It is a skill that we have here, associated with highly qualified, academic staff and with their experience gained often over years teaching able girls, of what is required in encouraging habits of hard work, persuading girls of this level of ability to realise their potential.
I hope I do not sound complacent—our success rate is not 100 per cent. in examinations, not every girl is totally enthusiastic about what the school has to offer or what it stands for, we do not always find the right approach to every one of our students—what institution could claim that it is always successful? Yet the thanks we receive from parents and girls, the letters that come from many after they leave do encourage us to feel that a tremendous amount of good work is done here. I hope we shall be able to continue this.
In a recent debate initiated by my right hon. Friend the Member for Bournemouth, West (Sir J. Eden) and my hon. Friend the Member for Bournemouth, East (Mr. Atkinson), the Under-Secretary of State indicated that one of the most prominent factors that the Secretary of State would consider if an appeal were to be made to him was the need to retain what had proved its worth in the existing system of secondary education. He went on to say that the Secretary of State would not normally approve proposals that would result in the closure or a significant change in the character of schools that had demonstrated their success in providing for sixth form education and which, in his judgment, should continue to do so.
The attention that this debate will receive and the representations made earlier by my right hon. and hon. Friends may yet persuade Dorset county council that, in even considering the closure of the remaining grammar schools in Dorset, it has embarked on a course that is unacceptable to the people of Bournemouth and Poole and that there are better methods of effecting any necessary economies.
Finally, should the county council attempt to close the grammar schools in Poole, we shall seek the protection of the Secretary of State and are confident that he will not see an excellent education system destroyed.

The Under-Secretary of State for Education and Science (Dr. Rhodes Boyson): I am grateful to my hon. Friend the Member for Poole (Mr. Ward) for raising this subject, not only because the way in which schools are organised in any area is a matter of considerable importance, but also because it raises matters of importance throughout the rest of the country.
I realise from my hon. Friend's quotations of constituents and head teachers in his area how closely he is in touch with his constituency. I know how highly he is respected as a Member.
I congratulate my hon. Friend on being born in a vintage year, the year in which I was born. I am not surprised by his effectiveness and his contact with everyone in the constituency. He was educated in a county technical school, a type of school that has disappeared. Such schools tried to create people for the technical age that we are moving into.
My hon. Friend then went to the univeristy of St. Andrew's, which commends itself to me, as I am the

president of the Conservatives there. It may be that my hon. Friend laid the foundations for its strong Conservative association. When I go there for the annual dinner, little do I realise that it is to him that I owe such a great organisation.
My hon. Friend fell slightly by the wayside after that. You and I, Mr. Deputy Speaker, must sympathise with him, in that he joined the Royal Air Force instead of the Royal Navy, though I realise the necessity for the RAF and am the last to condemn the requirements of the other Services. However, my hon. Friend would have been even more powerful, and this country would have been different, if he had joined me in the Royal Navy. Our friendship would not have had to wait so long to begin, until he entered the House.
Village schools were mentioned by my hon. Friend. I went to a village school myself. Despite coming from a strong Methodist family—I believe that you have similar religious connections, Mr. Deputy Speaker—I went to the small Church of England school, and it seemed to do me no harm. I learnt the 39 Articles, and that did me no harm. I always believed that we had an extra day's holiday on Ash Wednesday. That almost attracted me to the Church of England, which I joined later, when I was in the Royal Navy—like John Wesley, to bridge both worlds.
It was good to hear my hon. Friend commend the work done in the grammar schools and the old schools in his constituency, just as a headmistress commended the remedial work done elsewhere.
Becasue I was so impressed by my hon. Friend's speech, I feel that before long I must speak in his constituency. I shall not be surprised if I do so before many weeks pass. Just as I listened to him tonight, he will have to listen to me then.
As my hon. Friend knows, there is a long history to the current discussion of the reorganisation of secondary education in the Bournemouth and Poole areas. The 1976 Education Act was a typical example of the Labour Party's dogmatic approach. It is clear that Labour hon. Members are ashamed of it, as their absence shows. They are wearing sackcloth and ashes, feeling sorry for what was done in that Act.
The Act was a typical example of the Labour Party's dogmatic attitude to complex matters. It compelled local education authorities to submit schemes for comprehensive reorganisation, whether or not local people thought that comprehensive schools were right for their area, and whether or not local geography and existing school buildings meant that a comprehensive system was practicable.
I have served as the head of grammar, secondary modern and comprehensive schools. It is a question of having the right schools for the right area, depending on the circumstances, and then checking what they achieve. I am proud to have been a member of the Conservative Government who, as one of their first actions on taking office, put on the statute book the 1979 Education Act, which enabled those LEAs that had been forced against their will to submit proposals for comprehensive reorganisation to withdraw those proposals. What we were saying in effect was, "It is not part of the duty of central Government to impose a single form of organisation on every part of the country. There must be scope for flexibility, to respond to the different needs of different areas." That is part of the Conservative Party's political creed.
It is from diversity that strength comes. The only way to build a dry stone wall is to have different shaped stones. Both my grandfathers were farmers, and they taught me that. That is when I began to believe in the free society and the variety of people. Just as one needs a variety of stones to build a good stone wall, to build a powerful society one needs people with all kinds of talents to develop it to the full. We do not want everyone to be alike.
The Dorset county council was one of the local education authorities compelled under the 1976 Act to submit comprehensive proposals for Bournemouth and Poole. It did so in 1978, and was able to take advantage of the 1979 Act to withdraw them.
However, in common with almost all authorities, Dorset is faced with falling pupil numbers over the next decade. I understand that in Bournemouth—we have debated this previously—secondary pupil numbers are projected to decline from about 8,900 in January 1980 to 6,400 by 1990. That is a fall of about 30 per cent. It will mean that there will be about 2,400 spare places in secondary schools in Bournemouth. The situation in Poole is similar, with secondary school population numbers falling from about 6,300 in January 1980 to 5, 100 over the decade, which would leave 1,200 spare places. I also agree with my hon. Friend that the decline in the number of children coming through is less here than in the remainder of the country.
Faced with a fall in numbers of this order, Dorset has decided to look at the options which are open to it for organising secondary provision in ways which will make better use of the resources available. It has issued a consultation paper and held a series of public meetings to discuss the various possibilities. I understand that the council expects to be considering the results of the consultation process from April. It does not see any possibility of changes to the organisation of secondary schools in either Bournemouth or Poole being implemented before 1986. Many things may happen before then, such as general elections. In four years we may have another Adjournment debate.
My hon. Friend may find it helpful if I explain the statutory procedures which Dorset would have to go through if it wished to change the existing pattern of provision. The procedures are laid down in the Education Act 1980. They are designed to ensure that no local education authority can simply ride rough-shod over the wishes of local people.
If an LEA proposes to establish, close or significantly change the character of a maintained school, it must publish proposals to that effect and submit them to my right hon. Friend. Once it has done so, there is a two-month period during which objections to the proposals may be submitted. A statutory objection is one made by 10 local electors, by the governors of a voluntary school affected by the proposals or by any other local education authority concerned. If objections are received, the proposals automatically fall to be decided by the Secretary of State. He may in any case call proposals in for his decision if that seems appropriate. All voluntary school proposals are decided by the Secretary of State.
That should make clear to my hon. Friend why I cannot comment in detail on the options being canvassed by Dorset. If it decides to proceed with the reorganisation proposals for Bournemouth and Poole, it is likely that, one

way or another, the proposals will come to the Secretary of State for decision. My hon. Friend may even have hinted at that. My right hon. Friend therefore has a quasi-judicial role in the process. I have to take care not to seem to be prejudicing his decision by comments that I offer this evening.
However, I believe that my hon. Friend may find it helpful if I say something about the considerations that the Secretary of State bears in mind when reaching a decision on proposals for secondary reorganisation. In the first place, we recognise the tremendous difficulties presented by the sharp fall in the number of pupils. Many authorities simply find themselves with too many schools. Indeed, we estimate that it costs £100 per head to keep empty places in schools for heating, lighting and maintenance.
If we leave things as they are, we may find in some cases that classrooms are half-empty, teaching groups are uneconomically small and schools with few pupils cannot afford sufficient teachers to offer a balanced curriculum with a sufficient range of speciallised subjects, such as the sciences and modern languages. Rationalising provision by removing places surplus to present requirements therefore offers an opportunity to maintain the quality of education in two ways—by making it easier to protect the broad curricullum which we wish to see—and by releasing scarce resources which can be better used on books and teachers than on heating, lighting, cleaning and maintaining half-empty buildings. The Government said as much in a circular which we issued to LEAs last June.
However, the purpose of any reorganisation which flows from this process must be to ensure that existing educational opportunities are maintained, and, if possible, improved. There have been too many examples in the past of good—even excellent—schools being destroyed for the sake of an apparent rationalisation or the uniformity of provision. A school can be destroyed overnight, but it takes a long time for a successful school to be built up. Too often, the hopes and claims for the advantages of the new system have not been realised, and the net effect of some reorganisation schemes has been to reduce opportunity. My hon. Friend referred to the many changes in education over the past 20 years which did not meet the claims made for them before they were brought in.
For this reason, the Department is in the process of consultation on a draft circular setting out for authorities three policies which the Secretary of State will particularly take into account from now on. Most prominent among them is the need to retain what has proved its worth within the existing system of secondary education. The Secretary of State will not normally approve proposals which would result in the closure or a significant change in the character of schools which have demonstrated their success in the provision that they make for sixth form education, and which in his judgment can continue to do so. The exception that we make is where the prima facie case for retaining such a school is overwhelmed by other compelling educational considerations.
The draft circular also makes clear the Secretary of State's view that
proposals should have particular regard to parental preference, on religious or other grounds, for maintaining opportunities for the education of pupils in single sex schools
where it is obvious that there is parental demand. Finally, it emphasises the need to allow sufficient time for proposals to be implemented. We are thinking not only of those pupils who will experience the reorganised system


when it is fully in operation, but also of those caught up in the process of reorganisition. It is vital that LEAs plan to avoid disruption to those pupils' education. We are very concerned about parental choice of school, and we campaigned in the general election on parental choice of school. It is something in which my hon. Friend and I totally believe. Parents in the area give a vote of confidence or no confidence in the school. After all, the parents are risking the lifetime of their own children; they are not experimenting with other people's children. It is their children who are going to the school.
A copy of the draft circular has been placed in the Library if my hon. Friend is interested to look at it—not necessarily tonight, but at some future time—and we have asked for comments from interested bodies by the end of this month.
Naturally, the Secretary of State looks very carefully at all proposals which come before him, and the policies that I have just mentioned are taken into account along with a detailed study of the educational, financial and social implications of the proposals, before he decides whether to approve them, with or without modification. We also pay a great deal of attention to any points made by objectors. Indeed, there was a certain amount of objection

in what my hon. Friend said tonight. After all, they are local people who will be affected by the proposals: not only do they have a right to be heard—my hon. Friend will know that I spend much of my life meeting deputations concerned about particular proposals—but also they are likely to offer valuable insights into the effects of the proposals, and difficulties that may not be obvious at first sight.
In the end, however, the Secretary of State has to balance against each other the advantages and disadvantages of proposals. These are rarely as clear-cut as one would like, but I can assure my hon. Friend that the Secretary of State would not approve any proposals which he was convinced would be to the educational disadvantage of the children concerned.
I hope that what I have said this evening will have been helpful to my hon. Friend and to his constituents, and that he will have been reassured as to the care which we will take in looking at any proposals which may come before us from his area or from any other area.

Question put and agreed to.

Adjourned accordingly at eighteen minutes past Twelve o'clock.